On September 1, 2025, the UK government introduced a significant new measure to combat economic crime: the corporate criminal offence of ‘failure to prevent fraud’. Enshrined in the Economic Crime and Corporate Transparency Act 2023, this legislation will hold large organisations criminally liable if an employee, agent, subsidiary, or other associated person commits fraud intending to benefit the organisation.
This move represents a pivotal shift in the regulatory landscape for the insurance and financial sectors. Much like the failure to prevent bribery legislation introduced in 2010, the new fraud offence is designed not merely as a punitive measure, but as a catalyst for embedding a robust anti-fraud culture across businesses. Organisations are now required to demonstrate to the court that reasonable fraud prevention measures were in place at the time any fraudulent activity occurred.
The scope of the offence is broad, covering dishonest sales practices, concealment of critical information from consumers or investors, and manipulative behaviours in financial markets. In practical terms, this means that boards and senior management teams must take a proactive approach to fraud governance, ensuring that robust internal controls, employee training, and compliance monitoring are embedded at every level of the organisation.
This development comes at a time when fraud continues to rise at an alarming rate. The Office for National Statistics figures show a 31% increase in fraud last year, reinforcing the urgency of proactive risk management. The government’s wider Plan for Change includes measures such as a ban on SIM farms, bilateral agreements with the insurance sector, and the adoption of the first-ever UN resolution on fraud. Together, these initiatives signal a strengthened regulatory expectation for organisations to act decisively against fraudulent behaviour.
Insurance fraud has a significant impact on profitability for insurers and managing general agents, and it pushes up premiums for honest customers, so we need all the right tactics in place to combat this new form of digital deception.
For managing general agents (MGAs), the implications are clear. Claims functions are now at the forefront of fraud detection and mitigation. The insurance industry is good at using data to identify patterns, networks, and trends that highlight and alert the market to new and emerging forms of organised fraud. These techniques are well-developed in the insurance investigation space and have been very successful in exposing organised fraud rings.
The ability to identify suspicious patterns early, to interrogate claims data effectively, and to implement preventative measures is more critical than ever. Technology, and increasingly artificial intelligence, is playing a pivotal role here. Indeed, AI is becoming a major asset in the continuing fight against insurance claims fraud, delivering excellent improvements in the detection process. Potential fraudsters also use this new technology to refine and embellish dishonest activities.
This is why knowledge-sharing among claims experts has never been more important. Best practices, case studies, and collaborative discussions provide the sector with essential insights into emerging threats and effective mitigation strategies. I fully expect the newly in-force Failure to Prevent Fraud Act to spark robust debate at November’s ILC MGA Claims Conference. With the regulatory landscape evolving and fraud risks intensifying, convenings like this offer more than networking; they are a practical forum for developing solutions that can be applied across the market. In addition, with a softening rate environment and flat economic activity, the propensity for fraud has historically increased, it is another reason to attend the conference and discuss how collectively we can address these challenges.
The introduction of the failure to prevent fraud offence comes at a time when fraud is increasingly sophisticated and technologically enabled. I strongly feel that MGAs that embrace vigilance, collaboration, and innovation will be best placed to protect their businesses and their clients, and meet the requirements of the Act. November’s conference is the perfect opportunity to sharpen these capabilities, exchange insights, and ensure the sector remains one step ahead in the fight against fraud.
