Figures from the Association of British Insurers (ABI) confirms that UK Insurers thwart 2,400 fraudulent insurance claims valued at £25 million every week.
A focus on stamping out organised fraud, including ‘crash for cash’ staged motor accidents has contributed to a slight fall in the number and cost of fraudulent insurance claims detected in 2016, according to latest analysis published today (Friday, 7 July) by the ABI. Often organised insurance scams are carried out by highly sophisticated criminal gangs that can put innocent lives at risk, and have links to more serious organised crime, such as money laundering and human trafficking.
However, there was a small rise in opportunistic spur-of-the-moment motor insurance frauds. These are often encouraged by disreputable claims management firms, such as for whiplash-style claims.
ABI figures show that in 2016:
- Insurers detected 125,000 dishonest insurance claims valued at £1.3 billion. The number was down 5% on 2015, while their value fell 3%.
- The level of organised fraud fell by around 30% on 2015, with 15,000 frauds valued at £174 million detected. This fall reflects the work of the Insurance Fraud Bureau (IFB) and the Insurance Fraud Enforcement Department (IFED), the specialist police investigation unit, in exposing crash for cash staged motor accidents, and other organised frauds, such as criminals offering fake motor insurance. It is also believed that fraudsters are moving into new areas such as bogus liability claims. There has been an epidemic in false food poisoning claims made against some overseas hotels and tour operators, often encouraged by disreputable claims management firms.
Examples of organised insurance scams uncovered include:
- Four members of a criminal crash for cash gang were sentenced to over 37 years for their part in a staged accident that resulted in the death of a passenger in the vehicle they targeted.
- Following a five year investigation, six people were convicted of a series of sophisticated frauds, including setting up a claims handling firm to deal with bogus personal injury claims, and making a false business interruption claim worth nearly £600,000. They also defrauded funeral plan companies.
- A fraudster who sold non-existent car insurance policies in restaurants and internet cafes was ordered to pay back £253,000 he had made from the crime.
- Both the number and value of detected motor frauds fell. The number, at 69,000, fell 4% on 2015; their value, at £780 million, was down 5%. The reduction in organised frauds, such as crash for cash scams, contributed to this reduction.
- However, there was a small rise in opportunistic motor insurance frauds. While the overall number of opportunistic frauds detected at 110,000 remained unchanged on 2015, there was a rise in opportunistic motor insurance frauds uncovered – 57,000 compared to 54,000 in 2015. Opportunistic fraudsters will generally be otherwise law-abiding citizens. They are often encouraged by disreputable claims management companies, as seen by the resurgence in whiplash-style claims reported to the Government’s Compensation Recovery Unit.
- Property insurance frauds showed a slight fall. The number dropped 4% on 2015 to 26,000, while their value fell 2% to £106 million.
Some of the more unusual insurance cheats exposed include:
- Queue jumper, cue prison sentence. A motorist received a six month prison sentence after he deliberately cut into a lane of cars queuing to get over the Seven Bridge. He subsequently claimed that the victim had collided with him and that he had suffered a painful back injury. However, CCTV footage at the scene showed that he had caused the accident. You can see video footage here:
- Sticky fingers musician can’t get no satisfaction. A fraudster who claimed £35,000 over three years on a sickness policy for depression and anxiety that he claimed left him housebound was caught out singing with a tribute band, Sticky Fingers.
- Massaging bogus claims. A registered GP was jailed for two years for making false medical claims against insurers worth £183,000 for physiotherapy sessions that never took place
- Foul-mouthed cheat swears his way to court. A fraudster, who was abusive to insurance company staff to bully them into dealing with his fraudulent claims, was sentenced to 22 months. These claims included injury he said he suffered following his cooker exploding, when in fact the cooker was undamaged.
- Saddle sore. A woman admitted making three false burglary claims. One involved the alleged theft of horse saddles at a horse show. Another concerned household items, including horse saddles, that it was claimed had been damaged when moving house. The insurer became suspicious when documents to support her claim were on unheaded paper and contained spelling mistakes.
James Dalton, ABI’s Director of General Insurance Policy, said: “The vast majority of insurance claims are genuine, with millions being paid to customers every day. The industry does everything it can to keep premiums down and tackling fraud, which drives up prices for honest customers, is at the heart of that. So it’s great to see we have achieved real success in tackling organised fraud in the last year.
“Opportunistic fraud has shown a small rise as people continue to be pestered by disreputable claims management firms that are helping fuel the compensation culture. This makes it imperative that the Government tightens regulation of claims management companies, and presses ahead with its further reforms on whiplash, so we are pleased to see this much-needed reform in the Queen’s Speech.”
Ben Fletcher, Director of the IFB, added: “Fraud is harmful in a number of ways, including the real and present physical risk posed day in and day out to road users, alongside the financial impact on individuals and business alike. These reductions reflect the general trend that we have seen in organised motor scams and is a welcome reflection of industry efforts to tackle the problem year on year. The reality however is that £1.3 billion of fraud is still far too high and therefore the industry and government need to continue to work on ways to reduce the level of fraud further.”
Head of the City of London Police’s Insurance Fraud Enforcement Department, Detective Chief Inspector Oliver Little said: “The successful and strong relationship between the City of London Police’s Insurance Fraud Enforcement Department (IFED) and the ABI can be seen by these figures. This is a fantastic example of IFED working closely with the insurance industry to ensure that consumers are protected from such claims and perpetrators are brought to justice.
“Insurance fraud is taken extremely seriously and the consequences for those involved are severe. IFED will continue to work with the ABI to target those who carry out this activity.”
You can view the ABI press release here.