​Holiday hoaxes: Taking on travel fraud in the U.K.

Summer holiday season is here and, in the U.K., that has meant an increased vigilance for our fraud team. Over the last few years, fraudulent gastric illness claims against U.K. travel operators reached epidemic proportions. Travel trade association ABTA estimated a claims increase of 434% since 2013, hitting a peak during the end of 2016 and beginning of 2017.

While the industry acknowledges many holiday sickness claims are genuine, the significant increase in numbers during this period was fueled by resort touts and unscrupulous solicitors and claims management companies exploiting a loophole in the law that existed at the time. Because the claimed illnesses occurred abroad, they were not subject to the U.K.’s Claims Portal or fixed recoverable costs. 

With no cap on legal fees (which are often significantly more than the damages claimed) and not wanting their reputations damaged, many tour operators initially settled these claims without making robust background checks. This led to an epidemic of false claims from holidaymakers tempted into thinking it was a quick and easy way to make money. And with claims handlers busy managing an onslaught of false claims, giving the appropriate attention and care to those suffering legitimate claims became more of a challenge.

By the end of the summer holiday season in 2016, the situation had become so bad some tour operators were considering pulling out of all-inclusive package deals, while some hotels wanted to charge more or ban British holidaymakers from staying altogether. Gastric illness claims had become ‘the new whiplash claims’ for fraudsters. Something had to be done.

Working with four U.K. tour operators and having more than 80 staff dedicated to detecting and investigating claims fraud, we knew we could make a difference. If we could agree on a new fraud screening process and work with clients to review their claims payment strategy, we could save them money, discourage others from making false claims, and free up our claims adjusting resources to support those truly in need.

In September 2016 we met with our clients. Our new fraud screening process for new and existing claims would be based on our successful key investigation indicator (KII) process – a series of questions specific to an area of work or particular claim type which a handler or adjuster must consider when assessing the claim. In discussions with the holidaymaker or legal representation, or after a review of the existing information on file, if the claim reached the threshold for further investigation it would be passed to our national investigation centre (NIC) counter-fraud unit in Manchester. 

It was also agreed that any gastric illness claims from identified solicitors and claims management companies would automatically be passed to the NIC. Among these were individuals and firms who had previously been identified as being involved in fraudulent claims – and not just other holiday illness claims, but also fraudulent whiplash claims.

For the number of claims anticipated for further investigations, we agreed to a team of four dedicated fraud analysts. This new sickness validation team was set up within three days of our client meeting and we started investigating claims immediately. 

For any claim that breached the agreed-upon KII threshold, our fraud analysts would carry out further investigations looking for evidence that contradicted the claim, including:

  • Searching Facebook, Twitter and Instagram accounts of the person filing a claim
  • Searching the social media accounts for the hotel and other people this individual may have holidayed with
  • Reviewing hotel records of reported illnesses
  • Analyzing reports from the transactions of electronic room and food cards during the person’s stay
  • Reviewing satisfaction questionnaires completed in the resort or on the plane
  • Checking for financial difficulty – county court judgements (CCJs) for debt, etc.

From these further investigations we produced a red/amber/green (RAG) rated report which was made available to the claims handler:

  • Green-rated reports meant we had no concerns and the claims were either settled or not progressed for innocent reasons
  • Amber-rated reports meant we had some low level concerns – some claims would be settled, while others would be declined
  • Red-rated reports meant we had significant concerns and the claim was denied

Within weeks of establishing the sickness validation team, claims hit epidemic proportions. In its first three months (September to November 2016), the team received around 7,000 claims from tour operator clients – a 540% increase compared to the same three months the year prior. Although not all were gastric illness claims that needed further investigations, the sickness validation team in general was experiencing a similar increase in claims being passed to them for investigation. It was clear we needed more staff to cope with the volume, so we first recruited six more fraud analysts into the team and then hit a peak of 16 analysts within the following six months. The claims volume was such that we set up a second temporary team in Birmingham to increase our talent pool.

Overall, between September 2016 and the end of 2017, the sickness validation team screened 16,000 gastric illness claims, all well within our service agreement of ten working days. Of these, 3,391 were rated amber or red, and claims were either denied or the holidaymaker dropped the claim once our screening report was presented to their legal representatives. This resulted in £22m savings for our tour operator clients over the same period.

Due to our success in combating these fraudulent claims and a more rigorous fraud prevention strategy our clients have adopted in hotels and resorts, we’ve seen a significant decrease in suspicious holiday sickness claims in recent months. From a peak of investigating more than 2,000 claims a month, we’re now seeing a few hundred claims a month. Despite this, we’re still expecting to save our clients another few million pounds in 2018.

Key to the success of our sickness validation team was the speed in setting it up and our ability to expand the team to keep on top of increasing volume. The amount of money we’ve saved our clients is testament to the experience we have at combating fraud, even in new areas and under challenging conditions.


Congratulations to our travel operators sickness validation team for its win in the U.K. Customer Service Excellence Awards 2018 – Fight Against Fraud category, and best of luck as it joins the shortlist of potential honorees for the British Insurance Awards, to be held on the 4th of July.  Thank you for your commitment to delivering excellence!  

 

 

 

 

 

 

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