Deliberate non-disclosure is, according to CSC, a form of fraud that penalises honest consumers by driving up their insurance premiums and, because of this, may prevent people from purchasing the protection they need. According to Swiss Re in their Insurance Report 2005, the cost of fraud in the form of non-disclosure costs life insurance purchasers in the UK Â£250 million per year.
CSC was invited by the All Party Parliamentary Group (APPG) on Insurance and Financial Services, as part of its Autumn Session programme, to present its initiative to members at the recent âFinancial and Insurance Fraudâ session. The presentation was well received and the APPG expressed its support for this effort to combat fraud and to raise the level of understanding among consumers of how serious the problem is.
CSC based its presentation on the impact of non-disclosure on the UK life insurance industry, and stressed its belief that the insurance industry and Government must work together to communicate the benefits that such fraud prevention would bring to the general public and purchasers of life insurance - rather than to insurance and reinsurance companies themselves. This fact is little understood, according to David Lister, vice-president, CSC. He explained, âParliament can assist in combating fraud by proposing legislation but also by communicating to the general public and the media the importance of fraud prevention. For our initiative to be successful it needs Government and industry backing and also a major communications campaign to help the general public understand that honest consumers really bear the cost of fraud themselves and that any fraud prevention initiative will therefore benefit them.â
The next step in the process is to examine along with the leaders in the industry and regulatory bodies whether solutions to the problem that work elsewhere can be applied to the UK market. A workshop is scheduled for early February, 2007.