Insurers unveiled 107,000 fraudulent insurance claims in 2019

New figures published by the ABI reveal that insurers discovered a total of 107,000 fraudulent insurance claims in 2019, worth approximately £1.2bn – this is a 5% increase on the fraudulent claims detected in 2018.

This equates to a new scam being revealed every five minutes last year, amounting to around 300 fraudulent claims a day and 2,000 dishonest applications – these daily fraud attempts are worth £3.3m, according to the trade association’s annual insurance fraud statistics, published today (7 September).

The research showed that motor insurance fraud remains the most common type of scam, increasing by 6% between 2018 and 2019 to reach 58,000 fraudulent claims. Around 75% of these claims included a personal injury element, which is perhaps an attempt for fraudsters to cash in before the whiplash reforms are implemented next April.

The value of fraudulent motor claims, however, has decreased slightly to £605m. This is indicative of fake claims across different lines of business too as the overall value of detected claims fraud has shrunk by 2% to £1.2bn. The average value of a fraudulent claim has decreased from £12,200 in 2018 to £11,400 last year.

Detective superintendent Peter Ratcliffe, head of the City of London Police’s Economic Crime Funded Units, said: “Insurance fraud is not a victimless crime and the effect of dishonest claims are felt by everyone. As well as bogus insurance claims inevitably increasing premiums for honest customers, certain tactics used by fraudsters, such as ‘crash for cash’, put the lives of innocent members of the public at serious risk.

“Despite these encouraging figures, which show that IFED and the insurance industry are working well to combat insurance fraud, it’s vital that we don’t ease up on our efforts. The fight against insurance fraud is an ongoing one, so we need to continue working together to prevent and detect this crime type, and ultimately bring the criminals involved to justice.”

For property insurance fraud, dishonest claims increased by 30% to 27,000, while fraudulent claims values climbed to £124m – an increase of 8% since 2018.

Liability fraud, on the other hand, fell by 14% to 19,000 cases in 2019 – the ABI believes this may reflect the fact that many insurers are “clamping down” on fraudulent trip and slip, noise induced hearing loss and gastric illness holiday claims.

No apology

Mark Allen, the ABI’s manager for fraud and financial crime, said that the insurance industry makes “no apology for its relentless pursuit of insurance cheats, to protect genuine customers, who end up footing the bill through their insurance premiums”.

“Insurers will not hesitate to ensure that fraudsters seeking to profit at the misery and expense of others will suffer severe and long-lasting consequences,” he continued.

This approach is confirmed by the ABI figures, which show that improved prevention measures and better reporting has increased the volume of detected application fraud by more than 200%, equating to 760,000 cases in 2019 worth £1.4bn. This type of fraud typically includes the non-disclosure of previous claims.

Allen added: “Insurers know that the coronavirus crisis has led to financial hardship for some, and with scammers always preying on people’s anxieties, now it is especially important for consumers to be on their guard, for scams like being approached by someone offering cheap motor insurance. The golden rule is never act in haste – if a deal is too good to be true, then it probably is.”

Adele Sumner, head of counter fraud strategy and financial crime at RSA, said that the Covid-19 pandemic has been a heavy influence on insurance fraud.

She said: “The Covid-19 pandemic has meant many of us have altered our lifestyles and patterns of work. An unfortunate consequence of this is the opening up of new opportunities for fraudsters to execute scams.

“As an insurer we do as much as we can to combat fraud and prevent harm to our customers. We also recommend three simple steps everyone can follow: stop, challenge and protect. Stop; take a moment to think before parting with your own money or information. Challenge; consider the request, only criminals will try to rush or panic you. Protect; contact your bank immediately and report it to Action Fraud if you think you’ve fallen for a scam.”