25.07.24

Fraud – an alarming increase in fraudulent insurance claims

An alarming increase in UK fraudulent insurance claims

Tackling insurance fraud remains an industry strategic priority. In 2022, insurers detected 72,600 dishonest insurance claims valued at £1.1 billion. It is estimated that a similar amount of fraud goes undetected each year. This is why insurers invest at least £200 million each year to identify fraud.

Insurance fraud cuts across every type of insurance. At one end of the spectrum, fraud may be committed by opportunists, where people encounter an opportunity within their everyday lives to invent or exaggerate a claim or to deliberately or recklessly provide false information when applying for insurance. At the other end, there are highly organised criminal gangs, for example fraudsters involved in ‘crash for cash’ motor fraud scams.

Insurance fraud is a serious crime which can result in serious consequences for fraudsters, who may find their future job prospects impacted, find it harder to acquire insurance and other vital financial services, obtain a criminal conviction and even face the prospect of imprisonment.

Insurance fraud also impacts on society at large as valuable public resources, such as those in the NHS and courts, are spent on dealing with fraudulent cases. Consequently, honest policyholders pay higher insurance premiums as the costs of fraudulent claims are passed on to customers.

Insurers are committed to providing excellent service and paying all genuine claims as quickly as possible. However, fraud remains a significant threat to the industry.

To protect honest customers, the industry has invested, and will continue to invest, significant resources in deterring and detecting insurance fraud. In the first half of this year Cox Mahon have noticed a marked increase in the number of ‘claims’ that are clearly designed to hoodwink the insurance broker. We have received ‘doctored’ existing motor insurance policies with missing claim information. Also, according to Cifas (a non-for-profit fraud prevention service in the UK), “The increasing sophistication of false documents poses a significant challenge for the insurance sector. The ease by which fake websites can be created, and the growth of generative AI and deepfake technology manipulation means that some of these documents are highly convincing and may be capable of bypassing verification checks.

While organised crime groups continue to negatively impact the insurance industry, we’ve seen a rise in opportunistic fraud by individuals making false and exaggerated claims. Submitting a fraudulent car insurance claim can have serious consequences, including invalidating coverage and even result in prosecution”.

Reporting insurance fraud

Insurance fraud is not a victimless crime. Fraudulent claims drive up prices for honest customers and make your insurance more expensive. By reporting fraud, you can help us identify fraudsters and, with the support of regulators and police, bring them to justice.

If you suspect someone of insurance fraud report them to the Insurance Fraud Bureau (IFB) Cheatline by calling 0800 422 0421 or by filling out a form on the IFB’s website.

Information provided by ABI (The Association of British Insurers) and Cifas with contribution from Harrison Law, Cert CII, Head of Commercial & Private Clients, Cox Mahon Ltd.