Serious Fraud Office investigates major insurance scam

The Serious Fraud Office (SFO) in conjunction with the PSNI have revealed that around 1,000 local businesses have been affected by a multi-million pound insurance scam.

The investigation centres on a number of insurance brokers based in England and one operating in Northern Ireland.

Following this morning’s announcement on the investigation, the Minister for Enterprise, Trade and Investment, Ian Pearson, said: “Around 1,000 local businesses have been affected and the investigations by PSNI, and the Serious Fraud Office, into the actions of the brokers involved are therefore most welcome.

“Businesses will certainly wish to recover premiums which may have been lost, and I understand that this can be done through the civil courts. Businesses which believe that their insurance cover may be affected should contact their broker.”

Commenting on the additional PSNI and SFO examination of the problem of “grossing up”, the Minister said: “The announcement of an enquiry by PSNI into the practice of grossing up is also welcome. At a time where many businesses are facing additional pressure through increased premiums, any actions such as grossing up, which inflates costs, is clearly damaging to business and must be deplored.

“In addition, the proposed introduction of tighter regulation by the Financial Services Authority (FSA) will put a stop to such unfair practices. From January 2005, each transaction will be accompanied by a complete breakdown of the payment due. This step forward is bound to be a great benefit and confidence builder to any business.”

It is understood that the categories of insurance affected include employer’s liability, public liability and property insurance.

The practice of “grossing up” is the inclusion of extra commission in the overall premium being charged to a client company, which leads to inflated premiums.

The relevant voluntary regulatory bodies such as the General Insurance Standards Council and the British Insurance Brokers Association outlaw this practice.

A spokesperson for the Department for Enterprise, Trade and Investment said: “Where a business has lost its insurance premium it may obtain redress through the civil courts against the broker with whom the premium was placed.”

(SP)