Insurance fraud – detected at a rate of one a minute!
Research from The Association of British Insurers (ABI) reveals one insurance fraud per minute was discovered in 2017. The figures revealed that a total of 562,000 insurance frauds were found out by insurers in 2017, of which 113,000 were fraudulent claims and 449,000 dishonest insurance applications. According to the ABI the value of the fraudulent claims was £1.3bn. It added that while the number of fraud crimes was down by 8% compared to 2016, the value rose slightly by 1%. The organisation stated that the fall in number “reflects the industry’s collaborative work in detecting and deterring fraud”.
Meanwhile, the number of organised frauds, including staged motor accidents, fell 22% on 2016 with scams worth a total of £158m detected. The ABI noted that the reduction in this type of scams reflected the Insurance Fraud Bureau’s (IFB) and the Insurance Fraud Enforcement Department’s (IFED) work to investigate a rising number of suspected frauds. It added that IFED had secured over 400 court convictions for insurance fraud since it was formed in 2006. The value of the 67,000 detected fraudulent car insurance claims in 2017 rose by 4% to £775m.
However, the number of detected fraudulent property insurance claims fell by 11% on 2016 to 22,000. Claims were worth a total of £100m.
In addition, insurers discovered 449,000 cases of confirmed or suspected application fraud, the majority of which were people trying to get cheaper motor cover. Amongst these is the offence of “fronting”, where parents or grandparents insure a car in their own names when it should be insured by a young or inexperienced driver.
No apology for spending
James Dalton, ABI’s director, General Insurance Policy, said: “The vast majority of insurance customers are honest, and they rightly resent fraudsters pushing up their insurance costs. This is why the industry makes no apology for spending around £250m a year on measures to tackle insurance fraud.” He added: “It is good that organised fraud fell, especially as scams like staged accidents can often put lives at risk and involve huge amounts of money. But, with the Insurance Fraud Bureau (IFB) currently investigating a rising number of suspected insurance frauds, there will be no let-up in the crackdown on the insurance cheats. The rise in opportunistic motor fraud highlights that the stricter regulation of claims management companies, some of whom encourage dishonest claims, cannot come in soon enough.”
It is very complex
Ben Fletcher, director of the IFB, added: “These numbers go to show the complexity of the task that insurers and the industry have in fighting insurance fraud. IFB has seen a rise in the number of live investigations, as well as a more diverse range of fraudulent behaviours, as these criminals move to target new areas. Fraudsters are tenacious and regularly change their methods, moving between products, sectors and approaches. They will exploit any area they are able, and the industry faces a constant battle to stay one step ahead. Fletcher added that the IFB does not underestimate the challenge of insurance fraud, noting it is an issue that the insurance industry takes very seriously and has been investing heavily in combating in recent years. He concluded: “These results are encouraging and demonstrate to the would-be fraudster that the insurance industry is a hostile environment and every effort is being made to catch and stop them.”
The Diamond View
One a minute is over 500,000 a year. Is it worth the chance of getting caught and finding yourself with a criminal conviction – potentially with a prison sentence – for the sake of a few pounds? Obviously, NO! The hidden cost to the convicted fraudster is the difficulty they will have in obtaining insurance of any type and at any cost in the future.