Published: 05 December 2018
Britain is becoming a nation of fraudsters with one insurance scam now being committed every minute.
Cases include people lying or withholding information to try and get cheaper motor cover, to false personal injury claims.
The most comprehensive analysis yet into insurance fraud published today by the Association of British Insurers includes for the first time data on application fraud – where details such as age, address, or claims history are deliberately mis-stated.
The ABI has welcomed moves to tighten up on claims management companies which it accuses of encouraging dishonest claims.
Some of the insurance scams uncovered included:
Pothole claim full of holes. A cyclist claimed £135,000 compensation from a council for injuries he said he sustained when he fell off his cycle after hitting a pothole. However, evidence showed that the accident happened when he fell off on a slippery road at another location. He was jailed for three-and-a-half years.
Body builder pumps up his claim. A bodybuilder, who claimed £150,000 for a back injury, was exposed when he was filmed doing a press-up challenge. He was ordered to pay £35,000 in legal costs.
Bus cheats busted. The ring leader of a gang who staged a bus crash to try to get £500,000 in insurance pay-outs for fake injuries was jailed and banned from driving for two years. Using a rental car, he staged the crash, following which eight of his fellow fraudsters on the bus claimed for fake injuries to necks and hips.
The fraudster of Venice. A student was convicted after attempting to claim £14,000 through six invented claims following a trip to Venice, including the alleged loss of an iPod, laptop and designer watch.
Huge car insurance scam sees over 150 convictions. A four and half year police investigation into a huge crash for cash staged accident operation in South Wales, which netted the ringleaders £2 million, led to the convictions of 150 people.
Selling fake insurance leads to a genuine prison sentence. A man was jailed for three years and eight months for selling fake motor insurance policies to unsuspecting motorists.
Not injured, until the ambulance arrives. After staging a road collision, two fraudsters appeared uninjured until the ambulance arrived, when they then started feigning injury. Each received a jail sentence.
The figures highlight that in 2017:
- A total of 562,000 insurance frauds were detected by insurers. Of these there were 113,000 fraudulent claims, and 449,000 dishonest insurance applications.
- The number of dishonest insurance claims, at 113,000, were valued at £1.3 billion. The number was down 8% on 2016, while their value rose slightly by 1%. The fall in number reflects the industry’s collaborative work in detecting and deterring fraud.
- The number of organised frauds, such as staged motor accidents, fell 22% on 2016, with frauds worth £158 million detected. This reflected the work of the Insurance Fraud Bureau (IFB), who are currently investigating a rising number of suspected frauds, and the Insurance Fraud Enforcement Department (IFED). IFED is the specialist police fraud unit investigating insurance fraud, such as staged motor accidents and illegal insurance advisers (so-called ghost brokers). Since its formation in 2006, IFED has secured over 400 court convictions for insurance fraud.
- The value of fraudulent detected motor insurance claims, at £775 million, rose by 4% on 2016. The number of these frauds, at 67,000, showed a small rise.
- Fraudulent property insurance claims fell. The number detected dropped by 11% on 2016 to 22,000, with a value of £100 million.
- Insurers detected 449,000 cases of confirmed or suspected application fraud, where people lied or withheld information to try and get cheaper cover. Motor insurance made up the bulk of dishonest applications, with typical lies including the nature of the applicant’s occupation, and driving record, where previous claims and motoring convictions were not disclosed.
James Dalton, ABI’s Director, General Insurance Policy, said: “The vast majority of insurance customers are honest, and they rightly resent fraudsters pushing up their insurance costs. This is why the industry makes no apology for spending around £250 million a year on measures to tackle insurance fraud. “It is good that organised fraud fell, especially as scams like staged accidents can often put lives at risk and involve huge amounts of money.
“But, with the Insurance Fraud Bureau currently investigating a rising number of suspected insurance frauds, there will be no let-up in the crackdown on the insurance cheats.
“The rise in opportunistic motor fraud highlights that the stricter regulation of claims management companies, some of whom encourage dishonest claims, cannot come in soon enough.”
Ben Fletcher, Director of the IFB, said: “These numbers go to show the complexity of the task that insurers and the industry have in fighting insurance fraud. “IFB has seen a rise in the number of live investigations, as well as a more diverse range of fraudulent behaviours, as these criminals move to target new areas. Fraudsters are tenacious and regularly change their methods, moving between products, sectors and approaches. They will exploit any area they are able, and the industry faces a constant battle to stay one step ahead. “We don’t underestimate the challenge we face; insurance fraud is an issue that the industry takes very seriously and has been investing heavily in combatting in recent years. “These results are encouraging and demonstrate to the would-be fraudster that the insurance industry is a hostile environment and every effort is being made to catch and stop them.”