Crime is not paying what it used to
I make no apologies for the fact that the following text was lifted from one of the insurance industry weekly magazines. And, yes, that figure in the first paragraph really is: £25,000,000 per week of claims thwarted by the industry.
According to figures from the Association of British Insurers (ABI) “the con is not on” as the sector thwarted £25m worth of fraudulent claims a week in 2016. This amounts to 2,400 claims a week and £1.3bn across the entire year, the number was down 5% on what was uncovered in 2015 and the value was down 3%. Overall 125,000 dishonest claims were identified throughout the year.
The ABI analysis found that a focus on stamping out organised fraud, including ‘crash for cash’ staged motor accidents has contributed to the fall in the number and cost of fraudulent insurance claims.
James Dalton, ABI’s director of general insurance policy, said: “The vast majority of insurance claims are genuine, with millions being paid to customers every day. The industry does everything it can to keep premiums down and tackling fraud, which drives up prices for honest customers, is at the heart of that. So it’s great to see we have achieved real success in tackling organised fraud in the last year.”
However, the trade body also found there was a small rise in opportunistic spur-of-the-moment motor insurance frauds. It noted in a statement: “These are often encouraged by disreputable claims management firms, such as for whiplash-style claims.”
Both the number and value of detected motor frauds fell. The number, at 69,000, was down 4% on 2015 and their value, at £780m, was 5% lower. The reduction in organised frauds, such as crash for cash scams, contributed to this reduction according to the ABI.
With regard to a spur-of-the-moment fraud, while the overall number of opportunistic frauds detected at 110,000 remained unchanged on 2015, there was a rise in opportunistic motor insurance frauds uncovered – 57,000 compared to 54,000 in 2015. Dalton continued: “Opportunistic motor insurance fraud has shown a small rise as people continue to be pestered by disreputable claims management firms that are helping fuel the compensation culture. This makes it imperative that the government tightens regulation of claims management companies, and presses ahead with its further reforms on whiplash, so we are pleased to see this much-needed reform in the Queen’s Speech.”
For organised fraud, the level fell by around 30% on 2015, with 15,000 frauds valued at £174m detected.
The ABI stated: This fall reflects the work of the Insurance Fraud Bureau (IFB) and the Insurance Fraud Enforcement Department (IFED), the specialist police investigation unit, in exposing crash for cash staged motor accidents, and other organised frauds, such as criminals offering fake motor insurance. It is also believed that fraudsters are moving into new areas such as bogus liability claims. There has been an epidemic in false food poisoning claims made against some overseas hotels and tour operators, often encouraged by disreputable claims management firms.”
Property insurance frauds showed a slight fall. The number dropped 4% on 2015 to 26,000, while their value fell 2% to £106m.