More than half a million instances of insurance fraud were detected in 2017, amounting to one every minute last year, according to the Association of British Insurers (ABI).
The ABI’s most comprehensive analysis yet into insurance fraud includes data on application fraud—where details such as age, address, or claims history are deliberately misstated—for the first time.
A total of 562,000 insurance frauds were detected by insurers in 2017, the ABI found. Of these there were 113,000 fraudulent claims, and 449,000 dishonest insurance applications.
The number of fraudulent insurance claims, at 113,000, were valued at £1.3 billion. The number was down 8% on 2016, while their value rose slightly by 1%.
The number of organised frauds, such as staged motor accidents, fell 22% on 2016, according to the ABI, with frauds worth £158 million detected. This reflected the work of the Insurance Fraud Bureau (IFB), which is currently investigating a rising number of suspected frauds, and the City of London Police’s Insurance Fraud Enforcement Department (IFED).
IFED is the specialist police unit investigating insurance fraud, such as staged motor accidents and illegal insurance advisers (so-called ghost brokers). Since its formation in 2006, IFED has secured more than 400 court convictions for insurance fraud.
The value of fraudulent detected motor insurance claims, at £775 million, rose by 4% on 2016. The number of these frauds, at 67,000, showed a small rise.
Fraudulent property insurance claims fell last year. The number detected dropped by 11% on 2016 to 22,000, with a value of £100 million.
Insurers detected 449,000 cases of confirmed or suspected application fraud, where people lied or withheld information to try and get cheaper cover.
Motor insurance made up the bulk of dishonest applications, with typical lies including the nature of the applicant’s occupation, and driving record, where previous claims and motoring convictions were not disclosed.
James Dalton, director of general insurance policy at the ABI, commented: “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 £250 million a year on measures to tackle insurance fraud.”
“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 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.”
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.”
“We don’t underestimate the challenge we face; insurance fraud is an issue that the industry takes very seriously and has been investing heavily in combatting in recent years. 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.”
Detective chief inspector Teresa Russell, head of the IFED, said of the figures: “While these figures are encouraging, IFED is well aware that the fight against insurance fraud is an ongoing one and that fraudsters are constantly trying to come up with new ways to defraud the industry and members of the public.”
“Insurance fraud is not a victimless crime and dishonest claims are felt by everyone. The vast majority of people are honest with their insurer, but insurance cheats have no qualms about making false claims and simply don’t care that their fraudulent actions inevitably increase premiums for everyone else.
“Motor related insurance fraud makes up a large number of the cases that IFED manage and with opportunistic claims costing £775 million last year, it is important the unit continues to work closely with industry partners to prevent and detect this crime type.”