Sector must ‘start again’ to tackle ‘different beast’ of commercial fraud

The insurance counter fraud sector finds itself in an interesting moment. 

Fraudulent activity is on the rise as a whole, with the latest ABI statistics from September 2024 showing that in 2023, the cost of fraud had increased 4% year-on-year to reach £1.1bn. 

This increase even led the government, in October 2024, to announce what it called a “major new crackdown on insurance fraud” with the launch of its new Insurance Sector Fraud Charter (ISFC). 

But one of the problems of this fraud uptick is that insurance fraud is coming from diverse sources – and increasingly originating from commercial insurance customers in addition to traditional personal lines sources.

Speaking to Insurance Times in September 2024 about fraud trends across H1 that year, Allianz noted that it had detected a “large increase” in commercial application fraud across the period, with a particular rise in fake or cloned businesses submitting fraudulent applications for insurance. 

The insurer’s former head of counter fraud, James Burge, explained at the time: ”Commercial fraud needs to get more traction in the industry because while we’ve talked about personal lines for a long time, commercial fraud needs to be front and centre as the future of the discussion.”

This trend has not just been noticed by Allianz either. At the most recent Fraud Charter roundtable on 27 March 2025 – hosted by Insurance Times and sponsored by law firm Carpenters Group – numerous counter fraud experts explained that they had also picked up on the growing threat of commercial lines fraud. 

Ursula Jallow, executive director at sector body the Insurance Fraud Bureau (IFB), explained that the organisation was increasingly prioritising its education efforts around commercial insurance.

She said: ”Our campaigns for the year aren’t just around motor personal lines because there’s a real drive to make sure that we meet the commercial demands. 

”The IFB was created to stop crash for cash, which is still there and voluminous, but there is so much more happening in the commercial space.” 

Jallow added that the challenges of tackling fraud in the commercial lines sector mirrored some of those experienced nearly 20 years ago in the personal lines arena, when the insurance sector first came together to collaborate and share data in order to fight fraud.

She continued: ”It wasn’t that long ago that the insurance industry came together to tackle major personal lines fraud, so it should be easy to do it again for [commercial lines].

”Commercial lines [fraud] is a different beast, but we just have to start again and go again to tackle it.” 

Broker responsibilities

Counter fraud experts attending the Fraud Charter roundtable identified two major challenges facing the industry’s desire to confront the rise in commercial lines insurance fraud.

First and foremost, delegates noted that, because of the character of most commercial lines insurance buying, brokers had to be educated and involved in any industry response to fraud. 

Laura Horrocks, customer success manager at fraud focused technology supplier Shift Technology, explained: ”With commercial [lines], one of the big challenges is that insurers don’t have control over a majority of the data, unlike in personal lines, because the business probably came through a broker. 

“When a claim comes through, it most likely also goes through a third party administrator, so it may not be until the claim is concluded that [insurers] are even aware what the circumstances were.” 

A potential solution to this, said Horrocks, was to ensure that insurers and their working partners maintained “one central source of data throughout the whole course of a claim”.

Fleur Lewis, head of financial crime and operational oversight at Covéa Insurance, added: ”Getting commercial brokers to understand the problem and change their attitude towards fraud in general is probably one of the bigger [solutions].

”A lot of commercial fraud is easy to prevent really, but it’s about getting the broker’s buy in and making [it] more accountable. What we’re focusing on is our engagement with brokers around prevention controls and the standards we expect.”

As a sector, Lewis added that insurers should set minimum requirements for brokers around fraud controls, to catch out fraud methodologies such as stolen identities and false applications. 

Back to the drawing board

The other significant hurdle around combating commercial insurance fraud identified by counter fraud experts at the lunchtime roundtable was the lack of digitalisation in commercial lines generally, meaning that counter fraud strategies from personal lines that are enabled by technology could not easily be replicated. 

Paul Holmes, partner at DWF Law, explained: ”The problem in dealing with commercial fraud is that it’s a very different approach to dealing with motor fraud that often relies on data solutions. 

“With commercial, there is often no data link and no previous fraud, so you end up looking at things like underwriting fraud or company backgrounds and entities that are false, directorships that are false.

“Tackling this form of fraud requires a very different skill set to what we’ve traditionally had and that’s where we need to strip it back and take more of an old-fashioned approach.” 

However, Jallow added that while developing a comprehensive, sector-wide strategy to counter commercial fraud would take time, the most efficacious first step would be for insurers and brokers to agree on “the basics”. 

She commented: ”We need to establish basic rules that say ‘if you want to work with us, then this is what we expect from a prevention perspective’.

”If everyone across the market had the same set of principles, then we could catch a lot of this stuff. But it takes everybody to do it.”