New fraud detected every minute, says ABI

New figures from the ABI has revealed that a new insurance fraud case is detected every minute in the UK.

Over half a million insurance frauds were detected in 2017, according to the ABI’s study which includes application fraud for the first time.

A total of 562,000 cases of fraud were detected in 2017; 113,000 cases of fraudulent claims as well as 449,000 cases of dishonest applications.

Breaking down the numbers

Because this is the first time dishonest applications have been included in the report, there is no way to compare the 449,000 to a previous year.

But, the amount of fraudulent claims detected in 2017 (113,000) is an improvement on the year before, down 8%.

However, these fraudulent claims were valued at £1.3bn, which is slightly more than the value of claims in 2016 (1%).

The biggest notable improvement on 2016 came in the number of organised frauds, such as cash for crash schemes and ghost broking. In 2017, this number was 22% less than the year before, while being valued at £158m.

Motor insurance continues to be the most popular avenue for fraudsters, as the value of fraudulent motor claims went up by 4% from 2016 to £775m.

But, as the total amount of these types of claims only rose slightly, it shows the average value of these claims is increasing.

Meanwhile, fraudulent property claims fell by 11% in 2017 to 22,000, with a value of £100 million.

Case examples

Some of the most notable cases include when a bodybuilder claimed to be suffering from a back injury and tried to claim £150,000 but was rumbled when a video of him doing a press-up challenge surfaced online. He was ordered to pay £35,000 in legal fees.

Another example was a four-year investigation which led to the convictions of 150 people in South Wales. The ringleaders netted over £2m in the crash for cash operation.

Fraud is more diverse

James Dalton, ABI’s director of general insurance policy said: “The vast majority of insurance customers are honest, and they rightly resent fraudsters pushing up their insurance costs. This is why the industry makes no apology for spending around £250 million a year on measures to tackle insurance fraud.

“It is good that organised fraud fell, especially as scams like staged accidents can often put lives at risk and involve huge amounts of money.

”But, with the Insurance Fraud Bureau currently investigating a rising number of suspected insurance frauds, there will be no let-up in the crackdown on the insurance cheats.

”The rise in opportunistic motor fraud highlights that the stricter regulation of claims management companies, some of whom encourage dishonest claims, cannot come in soon enough”.

Ben Fletcher, director of the Insurance Fraud Bureau (IFB) said: “These numbers go to show the complexity of the task that insurers and the industry have in fighting insurance fraud.

“IFB has seen a rise in the number of live investigations, as well as a more diverse range of fraudulent behaviours, as these criminals move to target new areas.

”Fraudsters are tenacious and regularly change their methods, moving between products, sectors and approaches. They will exploit any area they are able, and the industry faces a constant battle to stay one step ahead.

“We don’t underestimate the challenge we face; insurance fraud is an issue that the industry takes very seriously and has been investing heavily in combatting in recent years.

”These results are encouraging and demonstrate to the would-be fraudster that the insurance industry is a hostile environment and every effort is being made to catch and stop them.”