Industry fraud crackdown sees dishonest claims fall in number and cost – ABI

A sustained crackdown on insurance fraud by the industry as a whole has resulted in a decline in both the number and cost of dishonest claims identified last year, according to new data from the ABI.

The average detected fraud was at a record high, however, of £12,283 as fraud volumes are reducing faster than fraud values.

The ABI’s chief fraud and financial crime officer, Mark Allen, said that the “fall in reported insurance fraud reflects the industry’s sustained counter fraud investment and collaborative approach, but no one can lower their guard against the cheats”.

Motor insurance claim fraud continued to be the most common type of fraud - although last year saw a fall in its total volume and value.

In 2021, motor insurance fraud dropped by 7% to 49,000 cases, while motor fraud value fell by only 1% to £577m.

The number of organised motor fraud incidents rose by 8% last year to a total of 10,617.

The ABI believes this overall increase in fraud detection is partly due to initiatives implemented by the Insurance Fraud Bureau (IFB), which aims to tackle crash for cash motor scams.

Help needed

IFB director Ben Fletcher said: “While we welcome this positive progress, fraud levels are still far too high and countless innocent people sadly continue to be targeted by devastating insurance scams.

“We must do more to fight fraud. Every day we’re working in partnership with insurers and the police to investigate suspicious activity and bring fraudsters to justice, but we also need the public’s help.”

Fletcher pointed to the IFB’s free, confidential Cheatline, which the public can use to report insurance fraud.

Detective inspector Andrew Thompson, from the City of London Police’s Insurance Fraud Enforcement Department (IFED), echoed Fletcher and Allen’s sentiments, adding that the insurance industry “cannot afford to take its foot of the pedal”.

He continued: “We have a bumpy road ahead of us, with a predicted rise in fraud due to the cost of living crisis driving people to find other means of financial gain.

“The need for solid partner working between law enforcement and the industry is now more important than ever to prevent an epidemic of insurance fraud.”

‘Fallen by the wayside’

Meanwhile, the Association of Consumer Support Organisations (ACSO) executive director Matthew Maxwell Scott said that although its “great to see a further drop in fraud”, what is needed is for the Insurance Fraud Taskforce (IFT) to reconvene.

This taskforce was set up in January 2015 to investigate the causes of fraudulent behaviour and recommend solutions to reduce the level of insurance fraud. It published an interim report in March 2015 and then its final report in January 2016.

Maxwell Scott continued: “The IFT report was originally published in 2016 and reviewed briefly in 2018, but there has been no industry-wide review of the report’s 26 recommendations to determine how many have been actioned and what the results have been.

“Some of those 26 recommendations have been enacted, such as the whiplash reform or beefing up claim management company regulation, and the IFB is a far more dynamic body now than five years ago.

“But some IFT recommendations have fallen by the wayside and now that we are facing a cost of living crisis, insurers themselves are warning that fraud may well be on the rise again.

“The government-backed IFT was groundbreaking in bringing all parties together to tackle fraud and eight years on, we think the IFT is needed once again.”