Insurance Fraud in UK Topped £1B in 2024, With Motor Scams Causing 53% of Claims

Insurers in the UK detected £1.16 billion (US$1.5 billion) worth of fraudulent insurance claims in 2024 – a 2% increase from £1.14 billion reported during the previous year, according to the Association British Insurers.

Insurers uncovered at least 98,400 fraud-related claims in 2024, a 12% rise from 88,100 in 2023, said the London-based trade association in its latest fraud report.

Motor insurance continues to be the area where insurers see the most illicit claims occurring, said the ABI, noting that they detected 51,700 motor scams worth £576 million ($757 million), which is 5% more than in 2023 and represents 53% of the total number claims made throughout the year.

Breaking down motor insurance figures, the ABI said, the value of fraudulent claims for domestic policies increased by £36 million ($47.3 million), or 9%, from 2023, while the figure for commercial policies remained relatively stable – rising by £1.7 million ($2.2 million), or 1.3%, year-on-year.

Insurers also identified 18,700 deceptive property insurance claims worth £189 million ($248.4 million) – 11% more than the volume of claims detected during the previous year.

When looking at the types of fraud scammers attempted to commit, exaggerated loss remains the most common. This is when someone deliberately attempts to increase the cost of a claim beyond its true value. Claims for this type of fraud rose by 10% and amounted to £466 million ($612.4 million).

Alongside this, insurers prevented an estimated 684,800 fraudulent insurance applications, a 7.4% increase from 2023, the ABI said, explaining that application fraud occurs when important information is purposefully misrepresented or hidden for financial gain when a policy is incepted.

“Fraud remains a persistent concern for insurance providers, particularly as economic pressures fuel both opportunistic and organized claims. Application fraud, in particular, is rising fast, with more than 680,000 cases stopped last year. This is against a backdrop of elevated shopping and switching activity as we have seen in motor,” said Dan Cicchetti, associate vice president of client engagement, UK & Ireland, LexisNexis Risk Solutions, in a comment about the ABI report.

“The challenge for insurance providers is to stop fraudsters at the front door without creating delay or friction for honest customers. This is where automated no claims discount validation, identity validation, email intelligence and named driver checks make a real difference,” Cicchetti continued. “Email risk scores and focusing as much attention on named driver risk as that of the proposer are already helping to spot ghost brokers and other fraud risks at point of quote or policy inception.”

The ABI went on to list some examples of fraud-related cases:

Ghost broking: A family affair. A father and son were sentenced for operating a fraudulent car insurance scheme. This involved selling fake policies using forged documents and leaving victims uninsured. The scheme generated over £61,000 ($80,166), with part of the proceeds shared between them. A third family member attempted to obstruct the investigation by removing evidence. All three admitted guilt and received various sentences.

Home insurance déjà vu. A man was sentenced to 20 months in prison for eight counts of fraud by false representation, involving multiple fake home insurance claims. This was the second time he committed similar offenses over an eight-year period, pocketing nearly £12,000 ($15,770) in payouts and using multiple identities.

Luxury watch fraud. High-value watches linked to theft or insurance fraud were being smuggled overseas to be resold. In response, the Insurance Fraud Enforcement Department (IFED) led a two-day operation at Heathrow Airport, checking watches against a global stolen watch database and advising passengers on how to avoid buying fraudulent items. The initiative aimed to disrupt luxury watch fraud and protect unsuspecting buyers.

Taking Multi-Pronged Approach

“In our recent tests, one in every hundred applications carried a strong fraud marker, and with over 300 million transactions screened a day, these enrichment tools give insurers a streamlined way to flag risk, focus investigations, and sharpen pricing,” said Cicchetti at LexisNexis. “Motor insurance fraud can’t be solved with a single approach – but by combining ID validation, email intelligence and cross-market insights, insurance providers can build stronger defenses while keeping the customer journey as seamless as possible.”

Mark Allen, head of Fraud and Financial Crime at the ABI, said, fraud can’t be tackled in isolation. “It needs a collaborative approach alongside those in other sectors. A lot of fraud occurs on social media, and it’s vital that technology companies and social media platforms work with us and play their part in prevention and detection.”

Allen warned that fraudsters are increasingly taking more sophisticated, agile approaches, which are being aided by AI.

“Ghost broking continues to be a serious threat to public safety and trust in the insurance sector. These criminals exploit digital platforms to sell fake policies, leaving victims uninsured and exposed to significant financial and legal consequences,” according to Nik Jethwa, detective chief inspector at the City of London Police’s Insurance Fraud Enforcement Department (IFED), in a statement accompanying the ABI report.

“Recent convictions and proactive operations, such as our work at Heathrow disrupting luxury watch fraud, demonstrate our commitment to tackling organised insurance crime head-on. With fraudulent claims now exceeding £1 billion, our operational focus remains clear: disrupt, deter, and bring offenders to justice,” Jethwa added.

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