Dual Australia will this week continue its exercise to recover $17 million of funds lost in a fraud allegedly committed by its former national claims manager, Jodie Gonzalez, and her husband.

Damien Coates, the CEO of London-based Dual International, is supervising the recovery operation, which involves lawyers, forensics specialists and fraud investigators. He says the civil action will continue until the “maximum possible amount” is recovered, after which the matter will be handed over to police.

The company alleges that Ms Gonzalez and her husband Alvaro engaged in a fraud that began when she joined the company in November 2010 and continued until it was discovered last month. They allegedly netted $17 million.

News of the fraud came to light yesterday when the Herald Sun newspaper published details of Dual’s action in the Victorian Supreme Court.

The court action by Dual last week was followed by the immediate freezing of the Gonzalez’ bank accounts, which contained $6 million, as well as assets including a $4.4 million house in the Melbourne suburb of Kew and a $600,000 townhouse. Their passports have also been seized.

It is understood Dual is confident of recovering most of the lost money.

Mr Coates told insuranceNEWS.com.au today that the action and an associated suppression order that was not lifted until the end of last week made it impossible for the company to communicate with its major broker customers last week. It had planned to do so this week but was beaten by the newspaper article.

Ms Gonzalez joined Dual Australia to handle financial lines claims in-house. She was recruited from claims-handling business Proclaim, where she had handled Dual accounts for some five years. She had previously worked as a lawyer at DLA Phillips Fox.

CEO Peter Bailey said at the time that she had “built up a great relationship with our brokers over the years and [the move to take financial lines claims in-house at Dual] has largely been in response to their feedback”. 

It is understood Ms Gonzalez used invoices from a fake legal firm, JAAG Lawyers, which she and her husband had set up.

Sources have told insuranceNEWS.com.au that invoices from the fake firm never exceeded 10% of a total claim. But as Dual’s business grew, so did the size of claims, and with them payments to the fake law firm. In the last few months of her employment up to $1 million a month was being billed by JAAG Lawyers.

Some $5 million in tax was paid by the fake firm, and legal sources have told insuranceNEWS.com.au this will be recovered.

Mr Coates says the $17 million reduction in Dual’s reserves over several underwriting years will have a “positive but not material” impact on the company’s loss ratio.

“Since Dual set up in Australia in 2004 it has written more than $500 million in premium,” he said. “We did raise the premium and change some conditions on our management liability product as a result of increasing claims trends. If you look at it in that context, the alleged fraud wasn’t material in that decision.”

No policyholder money was involved “and with the swift action taken we are confident there will be no financial impact on Dual or our capacity-providers”.

“I can advise that only our financial lines operations in Australia were affected by this claims fraud, and no other class of business or country in which Dual operates has been impacted.”

“I am personally handling this issue, and it is my priority,” he told insuranceNEWS.com.au. “It’s a horrible thing to have happened.”