Following on from Managing Director of HB Underwriting, Kyle Lomas’ appearance on BBC’s Countryfile as part of Scam Safe Week, we continue to raise awareness of the issue of fraud in the farming industry and how business owners can take steps to help protect against such losses.
Earlier this month, HB Underwriting, providers of specialist rural insurance – Rural Protect – reported having seen an increase in the number of claims being made for fraud over the last 2-3 years, from 1-2% to 9-10% of total claims. This shows just how prevalent fraud is becoming in the agricultural sector and the important role insurance can play in helping to support farmers should they suffer a loss relating to fraud. From fraudulent machinery adverts that dupe the victim into paying for machinery that doesn’t exist to phone scams and false invoices, fraud is a very real issue that farming businesses are having to contend with.
The Scam Safety Week episode, aired on Sunday 24th November from 17:45, can be watched here.
A real fraud incident
The business fell victim to email interception fraud in two parts. It started with the business receiving a genuine invoice from a supplier for £17,000; this invoice was intercepted by a fraudster, who amended the details of the bank account and then re-sent it to the farm, making it out to be a payment reminder. The business paid the invoice online and thought nothing of it.
The fraudster then repeated the same scam with another invoice from a different supplier – again, using a genuine invoice which they changed the bank details on; this time the amount due was £13,000. Again, this invoice was paid and nothing thought of it.
The fraudulent activity was only discovered when one of the suppliers sent a further invoice which showed the payment as outstanding.
How Rural Protect’s fraud cover helped
The business’s bank and the police were both informed upon discovery of the fraud. The bank were only ever able to recover £4,000 of the total £30,000 lost. This is where the business’s Rural Protect insurance policy came in; it provides cover for such fraudulent incidents. The insurance policy responded and paid out the customer’s limit of cover – £10,000, meaning the business recovered £14,000, though the other £16,000 remains unrecovered. It is worth noting that Rural Protect can currently provide up to £100,000 worth of cover for fraud.
Without the Rural Protect insurance policy, Mr Steven would only have recovered £4,000 and even this cannot be guaranteed to be recoverable in such an incident; a bank’s ability to recover funds will often be determined by the situation, timing and other factors.
Mr Steven said of Rural Protect: “Without the Rural Protect policy in place, we would have been much worse off. These incidents do happen and without protection in place, you have to be confident that your business won’t suffer an incident like this.”
Considering insurance cover for fraud
When it comes to fraud, it is important to understand the likelihood and potential impact on your business to be able to prevent it but also to make an informed decision about any insurance cover you may wish to take out, and the limit of that cover.
Fraud is just one area of cover provided by the Rural Protect policy, it also provides Employment Practices Liability, cover for contract disputes, fees for intervention charged by the EA and HSE,
defence of allegations against you or your business, and more. Speak to your broker to find out more about Rural Protect and how it could help you protect your business and livelihood.
