The Association of British Insurers latest study concludes that “the value of fraudulent insurance claims uncovered by insurers rose to a record £1.3 billion [$2.177 billion] in 2013, up 18 percent on the previous year.” Those figures “are more than double the cost the UK’s shoplifting bill.
The ABI’s latest figures on insurance frauds uncovered in 2013 show the following:
- Insurers detected a total of 118,500 bogus or exaggerated insurance claims, equivalent to 2,279 a week.
- The average fraud detected across all types of insurance products was £10,813 [$18,113]. While there was a small fall in the number of detected frauds their value, at £1.3 billion [$2.177 billion], was up 18 percent on 2012.
- Fraudulent motor insurance claims were the most expensive and common, with the number of dishonest claims at 59,900 claims up 34 percent on 2012 and their value at £811 million [$1.358 billion] up 32 percent.
- The number and value of property insurance frauds fell on 2012 with 35,000 frauds worth £137 million [$230 million]. These figures represent falls of 38 percent and 24 percent respectively on 2012.
- Since 2007 the value of dishonest general insurance claims detected has more than doubled, with the number detected up 30 percent over the same period.
The ABI, however, also detailed some of the measures that are being taken to fight the frauds as follows:
- Investigations by the Insurance Fraud Enforcement Department, a specialist police unit dedicated to tackling insurance fraud, have so far led to 470 arrests and 85 prosecutions of insurance fraudsters since it was established in 2011.
- Calls from the public reporting suspected insurance frauds into the Insurance Fraud Bureau’s Cheatline rose by 32 percent to 6060 in 2013 over the previous year.
- The Insurance Fraud Bureau (IFB) was created in 2006 to specifically tackle organized cross industry motor insurance scams. Currently the IFB is supporting police forces and insurers investigate 110 ‘crash for cash’ scams, throughout the UK. These scams alone represent approximately £120 million [$201 million] of financial exposure to insurers.
Aidan Kerr, the ABI’s Assistant Director, Head of Fraud, commented: “The vast majority of customers are honest and rightly expect tough action against the fraudsters. Insurance fraud is not a victimless crime, which is why the industry invests £200 million [$335 million] a year in fraud detection, including funding the Insurance Fraud Enforcement Department, and developing the Insurance Fraud Register, a central database of known insurance cheats. The more that is done to crackdown on the dishonest, the quicker and more effectively insurers can deal with the claims from the honest majority.
“The message is clear: never has it been harder to get away with committing insurance fraud; never have the penalties – ranging from a custodial sentence and a criminal record to difficulties in obtaining financial products in the future - been so severe.”
The ABI’s bulletin gave some interesting examples of selected fraudulent acts that were exposed. They include:
- Sixty people, including seven members of the same family, were convicted of a ‘crash for cash’ staged accident fraud which involved over £514,000 [$861,000] being claimed from 25 vehicle crashes alone.
- A professional golfer who claimed £8,000 [$13,400] on his income protection policy for a knee injury that he said left him unable to work, was caught on camera giving golf lessons. He was ordered to do 140 hours unpaid community work.
- A bus company was forced to scrap a bus route after it was targeted by ‘crash for cash’ fraudsters.
- A woman was jailed for twenty two months following a series of invented street robberies for items including laptops and designer clothes.
- A vet was jailed for two years for inventing veterinary claims totaling nearly £200,000 [$335, 020] for treating non-existent pets.
Source: Association of British Insurers