Untangling a super-sized insurance fraud
Insurance & Reinsurance
UK & Europe
Insurance fraud is on the rise, costing the UK insurance industry millions, if not billions, of pounds every year. Covea Insurance, which specialises in home, motor, and commercial insurance, was determined to get to the bottom of a particularly suspicious claim, involving a bright yellow Lamborghini, when it came to Clyde & Co for support.
A supercar super claim
The Claimant alleged that in November 2019, the Lamborghini was parked and unattended when Covea’s named driver collided with it, causing damage to the nearside. The insured driver left a note advising what had happened and accepted full liability for the accident and resulting damage.
With repairs estimated at over £72,000, the cost was further increased due to the owner’s claim that the vehicle was intended for rental by his company at £1,650 per day. This brought the total value under dispute, including loss of profit, to around £400,000. However, the final amount claimed in an updated schedule of loss totalled GBP 1.3 million loss of profit.
However, it soon became clear that the claimant’s story didn’t add up, and we supported Covea in carrying out an in-depth investigation to understand the full details of the situation, before taking the matter to trial. In the process, we uncovered a complex web of insurance claims fraud.
A multi-layered web of fraud
When Covea approached us, it had already compiled substantial evidence that this was a fraudulent claim.
Firstly, an independent forensic engineer, on inspecting the car, concluded that the damage made “very little sense whatsoever”, couldn’t have been caused by the named driver, and didn’t amount to the value of the claim.
Secondly, a cross-industry search flagged that this claim was linked to several other similar claims across different insurers, all involving the same companies and individuals. This immediately suggested that it was part of a larger network of fraudulent activity.
“Coincidentally, we were already dealing with one of the connected claims and it transpired that the two defendants were actually married,” explains Mel Mooney, who led the case. “Through collaboration and cooperation with a network of other insurers, we also discovered numerous associated claims involving the claimant’s brother, all for loss of profit on supercars.”
Further suspicions were raised by an interview our team carried out with the insured driver, as well as a lack of evidence to corroborate the incident.
“The insured driver claimed that she clipped the parked Lamborghini down an unlit road, in a cul-de-sac, a story which didn’t hold any water whatsoever,” recounts Mooney. “Why was this Lamborghini, this very expensive supercar, parked down this unlit road with no CCTV?”
Another line of inquiry was to seek an order from the court requiring the claimant to disclose all hire invoices for the Lamborghini prior to the accident, as well as bank statements for the rental company. Yet, despite two hire invoices being provided, further research showed that no money had changed hands, as the vehicle had been rented to a car mechanic in exchange for some improvements being made to the body work. The lack of accounts for the car also pointed towards fraud, despite the claimant’s pleas that he had only just intended to start hiring it out.
To add further complexity, a DPA request about the ownership and finance of the vehicle, showed that, while the claimant had been the owner at the time of the accident, the car did have a change of keeper in October 2021, almost two years after it had happened.
“When we questioned this, he explained that he sold it unrepaired, but with temporary fixes,” says Mooney. “But when we pushed him for an invoice, all he provided was a Word document, that could still be manipulated, stating repairs for £4,000. So, there was no way to know whether it was in fact a genuine invoice at all.”
Furthermore, the Facebook page of the garage used for the repairs included pictures of the Lamborghini while it was being fixed, which made it clear that it was in fact an extensive, heavy quality repair. This threw further suspicion on the entire story, but even so, our motor fraud team still needed stronger proof.
“Despite numerous indications that the Claimant was lying, at every stage he had provided an explanation. He took full advantage of being a litigant in person – a party without legal representation - to gain the sympathy of the court, however unbelievable and unlikely his claims,” says Mooney. “We needed to catch him out in a lie.”
The team eventually succeeded in doing just that when the owner reported that he made a loss when he sold the Lamborghini in October 2021, barely making enough to pay off the finance on the vehicle. However, the finance company had already confirmed that he actually paid the finance off in October 2020 – a year before he claimed he sold the vehicle, and the change of keeper took place. It was just one small detail that finally brought the whole house of cards tumbling down.
Fighting to the line for our clients
When the matter came to trial, we pleaded fraud, based on the extensive evidence compiled, including copies of the pleadings from the other related case, so that all the links were apparent and correct.
However, the rollercoaster didn’t end there, with the claimant continuing to evade attempts to resolve the matter, firstly claiming to have Covid symptoms on the day of the hearing, then failing to pay the trial fee, and finally failing to turn up for the trial.
The matter was eventually concluded when the claimant’s request for a drop hands offer shortly before trial was denied, and his failure to appear meant that it was struck out, and he was ordered to pay costs of £40,000. The positive result also ensured that Covea Insurance avoided paying the £1.3m for damage and loss of profit.
A cross-industry effort
With bogus insurance claimants devising increasingly sophisticated schemes to catch out insurers, it is vital that the industry works together to better understand and combat the problem. This case is a perfect example of collaboration in action, with Clyde & Co working both across the business and alongside other insurance firms, to resolve a highly complex case, and ensure that the claimant didn’t get away with it.
This case shows what you can achieve when you exchange information. The complexity of insurance fraud means that it’s impossible to understand what is going on if you work in siloes. Here, we worked closely with our internal intelligence team, who did a fantastic job, as well as with a range of other insurers, to unpick and eventually get the better of this particular fraudster.
Mel Mooney, Partner
Our team is built on scale, expertise and a new vision for technology. With scale, comes the largest data set in the casualty space, providing more complete answers and better management information.Read more