Shift from ‘greed to need’ drives fraud surge across personal and commercial lines – Allianz's Burge

Customers’ motivation to commit insurance fraud has shifted from ”greed to need”, driving a surge in fraudulent activity that is impacting both personal and commercial lines.

That was according to James Burge, head of counter fraud at Allianz, who addressed delegates during a panel session entitled Unveiling the art of deception: Exploring the impact of image and document fraud at the Verisk Insurance Conference 2024 (5 September 2024).

He said: “It’s been referenced that greed drives people to commit insurance fraud. However, I see a shift from greed to need – people now feel they need to commit fraud.”

For example, YouGov findings, released by the Insurance Fraud Bureau (IFB) last year (5 July 2023), identified a trend among young adults to turn to insurance fraud amid the UK’s cost of living crisis.

The survey revealed that one in four young adults would consider insurance fraud if facing financial difficulties.

Burge added that insurance fraud is no longer limited to just personal lines, however, and is “now affecting the commercial sector as well”.

Commercial lines fraud involves deceptive practices aimed at businesses, such as falsifying claims or staging incidents for financial gain.

Meanwhile, personal lines fraud typically involves individual consumers, often making false insurance claims or exaggerated losses, affecting policies like motor, home or health insurance.

Neil Jones, head of the UK claims investigation unit at Verisk, echoed Burge’s sentiments, explaining that the cost of living crisis has impacted both opportunistic and organised fraud.

He said: “Organised fraud is still present and continues to be a concern. However, it is becoming increasingly fragmented.

“While some instances [of fraud] still involve organised elements, we are seeing it spread more across different lines of business, including both personal and commercial lines.”

Surge

Feeding back on Allianz’s commercial lines business, Burge explained that traditional fraud, like staged motor incidents, are still prevalent.

However, he noted that other lines are seeing significant fraud increases, “particularly in property”.

He explained: “We’re seeing a rise in staged escape water claims and pre-existing damage claims related to storm damage.”

Data published by insurer Zurich in March 2024 supported Burge’s insight. Analysing its fraud data in the UK between 2021 and 2023, Zurich said it had detected and addressed 482,906 property fraud claims over this reporting period.

Meanwhile, “in the casualty space, we’ve observed notable numbers for this year, with people exaggerating severe injuries to claim more, leading to major losses”, explained Burge.

For example, Allianz UK noted a marked increase in fraudulent casualty claims in the first half of 2024, with a particular uptick in noise induced hearing loss cases.

The insurer also noted a “large increase” in commercial application fraud in H1 2024, with fake or cloned businesses submitting fraudulent applications for insurance.

Burge added: “This shift to need is driving people to commit fraud, extending beyond personal claims into commercial sectors.”