Cost of living crisis may drive ‘dishonest customers’ to opportunistic fraud – Ifed

There has been frequent recent commentary from both insurers and fraud experts in relation to the expected increase in fraud as a result of the cost of living crisis.

The National Fraud Intelligence Bureau (NFIB) – part of the City of London Police – recently said that “cost of living-enabled fraud was highly likely to become more prevalent”.

Additionally, in a speech at the end of 2022, FCA executive director for markets Sarah Pritchard said that we could “expect financial crime to become even more prolific during the cost of living crisis”.

It is also deeply concerning that more people have cancelled or reduced their cover due to the increased cost of living.

In November last year, for example, a survey from research firm Consumer Intelligence revealed that 7% of 10,096 respondents had reduced their insurance protection due to financial pressures arising from the cost of living crisis.

It follows that dishonest customers may see a fraudulent insurance claim as a way to make money, which we know and need to keep highlighting, will ultimately be at the expense of honest customers and their insurers.

Operation Tarkin

Against this backdrop, the Insurance Fraud Enforcement Department (Ifed) has been carrying out a variety of enforcement activity under the umbrella of Operation Tarkin – an intensification to tackle opportunistic fraud.

Clearly, the law enforcement response must be proportionate to the offending and we have been careful to use the right tactics on the right cases.

The Ifed team carried out activity on a variety of cases including multiple fraudulent jewellery claims on an engagement ring, a ‘stolen’ Rolex watch that was subsequently put up for sale and continued activity against ghost brokers, who are taking advantage of the financial squeeze by offering fraudulent car insurance.

One particular case that illustrates our work against opportunistic fraud well is the conviction of a man who deliberately damaged his rigid inflatable boat and then dishonestly claimed over £6,000 for accidental damage.

The diligence of the insurance fraud investigator – and our expertise in bringing criminal charges and presenting a case with overwhelming evidence for the court – made a guilty plea the only option.

This case shows that we will tackle lower level offenders that are seeking to exploit opportunistic fraud.

Serious offences

Although this column focuses on opportunistic fraud, I also want to dedicate some of the article to highlighting the outstanding work of my Ifed colleagues in applying for and successfully being granted a Serious Crime Prevention Order (SCPO) against Hamid Sediqi, 38, of Somervell Road, Harrow – who Ifed convicted.

Sediqi was then sentenced to four years in prison – an SCPO can be applied for following conviction for a serious offence, including fraud, to protect the public by preventing, restricting or disrupting involvement by the person in further serious crime.

In this case, upon his release from prison, Sediqi will be monitored and have restrictions around phones, bank accounts and digital devices to limit his scope for offending and protect the insurance industry.

This is the first order of this kind for Ifed and I anticipate more will follow in the future.