Fraudulent claims increase by 27% in 2018

False insurance claims in the UK increased by 27% in the past year, new research has found.

According to Cifas, the fraud prevention service, its 450 members have identified household and motor insurance fraud as the two biggest causes of false claims – with a 52% and 45% increase respectively.

Fronting going back

However, fronting, where a parent claims they are the main user of a vehicle that is actually driven by a young driver or other high-risk motorist in order to receive lower premiums, has been on the decrease.

Cifas members reported over 300 cases of fronting in 2018. The data did however show an 18% increase in the proportion of 21-30 year olds conducting this type of fraudulent activity.

Faces of Fraud

The findings has prompted Cifas to launch its ‘Faces of Fraud’ campaign, urging people to consider the temptations which may lead to consumers committing fraud. Temptations such as the lies, exaggerations, deceptions and “seemingly” harmless opportunities to make some quick cash or get a better deal that are actually criminal acts.

Cifas also wants people to consider the consequences of committing fraudulent activity, and how those consequences are often much more severe than they first anticipated.

Consequences can include non-payment of claims; cancellation of the insurance policy; individuals having to pay costs that arise from an accident; a record with Cifas and the Insurance Fraud Register (IFR), making it more difficult to obtain insurance and other financial services. The case could also be reported to the police for investigation: potentially leading to a criminal conviction and a prison sentence.

“People are unaware of the risks”

Chief executive officer of Cifas, Mike Haley, said: “False insurance claim fraud and fronting insurance policies fraud are often seen as an easy way to make a bit of money without hurting anyone. Yet the idea that fraud is a victimless crime is completely false.

“First, false insurance claims and fronting insurance policies are illegal. They can impact your life and career, making it near-impossible to buy insurance in the future and can even lead to a criminal record.

“Second, committing fraud hurts everyone: your neighbours, your friends, people in the area, and the UK as a whole. Insurers have to spend longer reviewing insurance claims and policy requests, premiums go up, and everyone loses out.”

“As the rise of false claims in household and motor insurance shows, many people are seemingly unaware of the risks they’re running and the consequences it can have by committing everyday fraud.

“While the overall downturn in fronting insurance policies is a positive sign, the fact that young people are increasingly more likely to commit that type of fraud highlights the need for continuing education. More needs to be done to raise awareness about the harm of fraud and financial crime.”