The level of detected insurance fraud is at a record high. But rather than suggesting that insurance fraud is increasing, it shows that the insurance industry is getting better at not just detecting it but pushing for prosecution of offenders.
Stephen Gaywood, director of counter fraud at the AA, says:
“This shows that the estimated £200m the industry invests each year in fraud prevention and detection is paying dividends and confirms that those attempting to defraud their insurers are increasingly less likely to get away with it.
“Insurance fraud is little more than common theft. Most casual fraudsters wouldn’t consider reaching over a shop counter and pinching a handful of notes from the till yet stealing from insurance companies is no different. Whether it’s exaggerating a legitimate travel insurance claim; falsifying details on an insurance application to get a lower premium or attempting a cash-for-crash collision to make a false injury claim, it is still theft.
“The AA’s own research showed, for instance, that 11% of drivers do not consider that there is anything wrong in making a claim for whiplash injury following an accident, even if no injury was suffered – yet doing so is an attempt to make a dishonest turn at the insurance company’s cost.*
“Insurance fraud is not a victimless crime because it affects everyone who sees their insurance premiums go up as a result. In fact, it’s estimated that it adds around £90** to the insurance costs of every household.”
“Although these figures are to be welcomed, most insurers believe it is the tip of the iceberg,” Mr Gaywood adds. “However, I am concerned that with increased pressure on premiums in the industry and particularly with the Insurance Premium Tax hike*** this Autumn, the industry’s focus on fraud should be stepped up, so as to reduce the risk of passing the cost on to honest policyholders.
“The AA is working hard to support the next stages in taking the fight to the fraudster.
“We work closely with other insurers to share information and develop new detection techniques to identify potential fraud. We also continue to work with the Insurance Fraud Bureau and the wider industry’s work with the police Insurance Fraud Enforcement Department to help stamp on those who take insurers for a ride.
“I also welcome the Government’s Budget announcement that fees earned by claims management companies will be capped. This should help to stem the flow of cold-call attempts to persuade people to make claims for injury they might not have suffered.
“Progress is being made and the more that successful prosecutions for fraud are made public, the more potential fraudsters will think again: whether it is organised crime or individuals trying it on.
“Insurance fraud should become socially unacceptable rather than something you boast about to your mates in the pub.”
AA examples of detected fraud
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A driver had another car overtake him, pull in sharply and brake heavily, causing him to collide with the rear of the other car. A claim was subsequently submitted for injury to three individuals in that car. But cctv coverage showed what had happened and that there was only one person in the car – the driver – who was attempting to make money from an insurance claim for a deliberate crash.
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A lady driver regularly parked her BMW outside her home in a London terraced street and it was damaged by an unknown third party during the night – thought to be by a lorry. In the subsequent insurance investigation it was found that on her insurance application she claimed to live at an aunt’s house in an Essex village and that the car was garaged every night. The insurance premium was therefore less than half the cost that she should have been paying.
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A householder claimed for the loss of a Cartier watch that he claimed was stolen from his wrist on a crowded station platform. The insurance company asked for some proof of ownership of the watch in the absence of a receipt so the householder arranged to send the original box to the insurer. He neglected to take the watch out of the box before mailing it.
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Odd credit card transactions for motor insurance in a small geographic area were investigated over several weeks which resulted in uncovering a ‘ghost broking’ fraud where an individual was selling ‘cheap’ car insurance to East European immigrants, using several insurance companies. Policies were bought but details were falsified without the knowledge of the buyers of cover. The ‘broker’ was eventually apprehended
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