Royal Insurance Spins Off Anti-Fraud Unit as Separate Company

Strategic Insights -

Royal Insurance, a leading provider of insurance services, is taking a major step in the fight against insurance fraud by spinning off its special investigations unit into a separate company. Investigative Resources Global, Inc. (IRG) will offer anti-fraud services to the rest of the industry, targeting smaller insurance companies that lack the expertise to handle complex investigations. With fraud estimated to cost the insurance industry about $68 billion annually, the need for specialized investigative services is clear.

Key Takeaways:

  • Royal Insurance's special investigations unit (SIU) is being spun off into a separate company, Investigative Resources Global, Inc. (IRG), to offer anti-fraud services to the insurance industry.
  • IRG will focus first on the Southeast, then expand to the Northeast and West Coast, serving insurers and self-insurers without in-house investigative expertise.
  • The new company will utilize the expertise developed by Royal's SIU over the years, including its experience in handling complex, large-loss fires.
  • Royal's SIU has 50 employees in seven offices across the country and will transfer to IRG, continuing to handle the company's fraud and fire investigations.
  • The new company aims to share information and expertise globally, building on Royal's international presence.

Statistics:

  • Estimated annual cost of insurance fraud: $68 billion
  • Savings generated by Royal's SIU: $10 in indemnity costs for every $1 spent, amounting to over $25 million in 1994
  • Number of employees in Royal's SIU: 50
  • Number of offices for Royal's SIU: 7
  • Countries where Royal Insurance Holdings plc operates: more than 60

Sources:

  • PRNewswire, "Royal Insurance to Spin Off Insurance Fraud-Fighting Unit"
  • Royal Insurance, press release (March 7, 1995)
  • Fred E. Dabney II and Rita M. Rouse, Royal Insurance, for contact information