Copycat fraud in the workplace

Great strides have been made in fraud prevention and detection over the last 100 years, often in the face of significant social, political, and legal obstacles. Motor fraud has become a ‘managed risk’ over the last decade with improved fraud awareness, advanced strategies, and high-level data sharing resulting in increased detection rates.

Legal developments, such as the Legal Aid, Sentencing and Punishment of Offenders Act (LASPO), have made the pursuit of motor claims less profitable with the banning of referral fees and the restrictions on recoverable costs.

However, there has been a shift into more lucrative areas such as employers’ and public liability. Claims-farming techniques are used to target particular communities or workplaces. This, coupled with social and financial pressures, has lead to significant increases in workplace claims, meaning, more likely than not, a claim will follow a workplace incident irrespective of severity or cause.

Of more concern is that the prevalence of fraud claims appears to be higher in workplace claims. Coupled with marked increases in dubious noise-induced hearing loss claims, this means the predicted cost of fraud to employers is significantly higher than to drivers or home owners.

Copycat claims are starting to bridge the gap between opportunistic and organised frauds. Disenfranchised employees are enticed into making fabricated claims. Each fraud spawns yet more until the workplace is saturated and a rolling claims culture is established, as previously opportunistic fraudsters become repeat offenders.

All employers and industry sectors are exposed to such fraud but workplaces with high levels of repetitive or manual handling activities have the highest exposure.

Organised fraudsters have also taken advantage of workplace claims and use local knowledge to target businesses. Companies with high staff turnover or reliance on agency workers are at particular risk.

Knowledge of intervening incidents, such as fires, floods, or business collapses, have been exploited due to the potential impact they have on investigating claims. Warehousing and logistics companies make attractive targets.

Despite this trend there is a unique opportunity to learn from the motor arena. Techniques and strategies such as data sharing and analytics assist in identifying suspicious claim spikes. Interaction with third-party stakeholders ensures fraud is on the agenda at all levels. Greater engagement with police and use of prosecution, bankruptcy, and the Insurance Fraud Register ensure those who operate outside the law are punished.

What is unique to workplace claims is the role employers have in identifying fraud. They form the filter at first notification of loss and identification of suspicious activity. Accident investigations can be tailored to ensure the existence of an accident report is not self-proving. Similarly, they can ensure information provided post accident deters the workforce from making copycat claims.

Education and awareness is of paramount importance to ensure that fraud is identified and repudiated without impacting on genuine claims or resulting in unnecessary costs or court time. SJ

Antonia Ford is a partner and head of the counter fraud team at Clyde & Co

@ClydeCoNews

www.clydeco.com