Sabrina N. Gordon, Business Reporter

The Insurance Association of Jamaica (IAJ) and the Jamaica Constabulary Force have entered into an agreement to collaborate on tracking down insurance fraud. Here, (from left) Police Commissioner Rear Admiral Hardley Lewin and IAJ president Andrew Levy sign a memorandum of understanding. At right is Michael Fraser

The Insurance Association of Jamaica (IAJ) and the Jamaica Constabulary Force have formalised a partnership to bring to book the perpetrators of insurance fraud and auto theft with the signing of a memorandum of understanding.

The agreement, inked by IAJ president Andrew Levy and Commissioner of Police Rear Admiral Hardley Lewin in mid-May, sets out the areas of cooperation and pledges the parties to collaborate on the containment of what has become a multibillion-dollar problem.

padded claims

A study by the IAJ shows that padded claims accounted for 35 per cent of total motor-insurance claims in 2007, representing a loss of $3 billion to fraud for general insurers.

It was also estimated that some 1,500 vehicles were stolen last year, at a cost of $1.3 billion in claims to the industry.

The IAJ is the umbrella body for the island's 17 insurance companies, 12 of which provide general coverage.

The programme, which will cost approximately $15 million to implement, involves the sharing of information with the police via a database to be developed by the IAJ, to include policy records from all the general-insurance companies.

special contributions

The project cost is to be borne by participating companies.

"Each member of the IAJ has agreed to make a special contribution towards the project," said Levy.

The majority of the funds is to be spent on the development of software for the database, which will be hosted at the IAJ office at Richmond Avenue, St Andrew. The police will be given 24-hour access.

This means that the police will have access to real-time information to verify immediately - even in routine traffic stops, day or night - whether insurance papers are real or fake. The system, though electronic, is low tech.

no hand-helds

The police officer will not have hand-helds to make the connection. Instead, he or she will have to call or radio through to the police control centre, which will access the IAJ database from desktop computers, and pass the information along to the beat cop.

It basically mimics the system that the police have to check on stolen motor vehicles, with the exception that such information tends to be mounted on a board in individual police stations.

"The system will be kept to its simplest form based on the equipment that the police currently have," Levy told Sunday Business.

"The officers will be able to radio in to their central point, which will then be able to securely log into a database and query whether a particular vehicle is legally insured."

legitimate insurance coverage

All vehicles are required by law to carry motor insurance. Essentially, drivers with fake papers deny business to insurance companies.

This tracking system is expected to force those with illegal papers to take out legitimate insurance coverage.

But while the industry stands to benefit from an expanded market, Levy says that it will be win-win for all.

"The police will benefit with less fraudsters on the road, and with less fraudulent claims, then the lower premiums can be to the benefit of the public," he said.

Drivers with illegal papers, he added, "are costing the industry - causing claims, but not contributing to premiums".

General insurers will also now have access to information on traffic tickets issued by the police.

"Currently, there is little sharing of traffic- ticket information, which is an important part of our risk analysis," said Levy.

"We are hoping to get access to this database, as persons who drive faster should pay more, and right now, we can't make that assessment."

The IAJ is also hoping to get access to the central motor-vehicle registry, where they will be able to check on the ownership of vehicles when persons apply for insurance.

But for now, the main focus is to get the database up and running.

sabrina.gordon@gleanerjm.com