Insurers detected 125,000 dishonest claims valued at £1.3 billion last year, a 5% drop from 2015.
The figures have been released by the Association of British Insurers (ABI), which said that the value of the claims fell by 3% as well. It also found that the level of organised fraud fell by around 30% compared to 2015, with 15,000 cases of fraud valued at £174 million having been detected.
It said that the 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 was a small rise in opportunistic motor insurance frauds. While the overall number of opportunistic frauds detected at 110,000 remained unchanged from 2015, there was a rise in opportunistic motor insurance frauds – 57,000 compared to 54,000 in 2015. The ABI said that they are the result of usually law-abiding people being encouraged by disreputable claims management companies – as seen by a resurgence in whiplash-style claims reported to the Government’s Compensation Recovery Unit.
Away from motor fraud, the ABI stated that there has been an epidemic in false food poisoning claims made against some overseas hotels and tour operators, again often encouraged by CMCs.
Property insurance frauds showed a slight fall. The number dropped 4% on 2015 to 26,000, while their value fell 2% to £106 million.
James Dalton, the 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.
“Opportunistic 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.”
Ben Fletcher, director of the IFB, said: “Fraud is harmful in a number of ways, including the real and present physical risk posed day in and day out to road users, alongside the financial impact on individuals and business alike.
“These reductions reflect the general trend that we have seen in organised motor scams and is a welcome reflection of industry efforts to tackle the problem year on year. The reality however is that £1.3 billion of fraud is still far too high and therefore the industry and government need to continue to work on ways to reduce the level of fraud further.”