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Fraudulent insurance claims on the rise

Fraudulent insurance claims on the rise

Category: Insurance

Updated: 14/09/2016
First Published: 14/09/2016

Fraudulent insurance claims don't do anyone any favours. Not only can they be disastrous for the cheats in question, but they can lead to higher insurance premiums for everyone else – and unfortunately, such fraud is on the rise.

Data from the Association of British Insurers (ABI) reveals that insurers detected more than 130,000 fraudulent claims last year – the equivalent of 2,500 each week, and marking an increase of 6% on 2014's figures. However, the value of those frauds decreased, with the total of £1.3bn being down 3% year-on-year.

There was a particular rise in dishonest liability insurance claims, such as "slip and trip" claims. The number of those detected rose by 36% to 26,900, while the value (£391m) was up by 14% on 2014. While this sounds like a sharp increase, the figures could hide the extra work done behind the scenes; the ABI has stated that the rise could be due to the fact that this area has become a focus for the industry, which means more dishonest claims are being detected.

The property sector appears to be another area at risk of insurance cheats, with the Association saying that opportunistic property fraud remains an ongoing threat. As a result, the number of detected frauds rose by 7% year-on-year to 27,500, despite the value of those frauds (£107m) falling by 2%.

However, by far the biggest victim of dishonest claims is the car insurance sector, with such claims being the most common frauds as well as the highest value – yet the figures are beginning to fall. A total of 70,000 fraudulent car insurance claims were detected last year, down 2%, with the value of £800m marking a 10% drop. This "welcome fall" reflects the improved management of fraud within the industry, said the ABI, together with the work of the Insurance Fraud Bureau (IFB) and the Insurance Fraud Enforcement Department (IFED).

James Dalton, ABI's director of General Insurance Policy, commented on the findings: "Insurance cheats do not lack nerve or ingenuity, which is why there will be no let-up in the industry's commitment to protect honest customers. The chances of getting caught have never been greater, and the consequences, such as a prison sentence and difficulty in getting future insurance and other financial products, have never been more severe and long-lasting.

"Reducing fraud is part of a bigger picture of reducing unnecessary costs, so that honest customers benefit from the most competitive insurance deals. This is why it is important to ensure that the Government implements further proposals aimed at tackling rising personal injury claims, and that there are no further increases to the rate of Insurance Premium Tax."

What next?

Fraudulent claims can add to the cost of insurance premiums, so make sure you get the best price possible by comparing your options

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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