Detected dishonest claims reached a value of £1.2bn during the year.
The total number of fraudulent claims and applications detected rose by 3% to 469,000 in 2018, with their value up 6%, according to figures from the Association of British Insurers (ABI).
The organisation reported that 1,300 insurance scams were uncovered every day, with the average con valued at £12,000. According to the ABI, the value of the detected dishonest claims was £1.2bn, down slightly from the £1.3bn reported last year.
The insurer trade body said the equivalent of two cheats every week received a criminal conviction or a caution for insurance fraud during 2018, with motor insurance scams remaining the most common and most expensive.
Cases investigated by the Insurance Fraud Enforcement Department (IFED) included sixteen people involved in a crash for cash crime gang who received a collective 33 years in jail sentences, and a man convicted of selling fake motor insurance who was jailed for two years.
The ABI’s latest detected fraud figures showed that in 2018:
- A total of 469,000 insurance frauds were detected by insurers. Of these, 98,000 were fraudulent claims, with 371,000 dishonest insurance applications. The number of fraudulent claims detected fell 6% on 2017, while the number of dishonest applications for cover rose by 5%.
- The value of the 98,000 dishonest claims detected, at £1.2bn, fell marginally by under 1% on the previous year.
- 55,000 dishonest motor insurance claims worth £629m were detected. The number and value of these claims both fell on the previous year – down 8% and 9% respectively.
- Of the 55,000 motor insurance frauds, 80% involved personal injury fraud. These ranged from staged crash for cash frauds to opportunistic scams. The measures in the Civil Liability Act will help ensure fair compensation for genuine claimants.
- There were 20,000 property frauds detected, down slightly on the previous year. However, the value of these frauds, at £115 million, rose by 11%.
Mark Allen, ABI’s manager of fraud and financial crime, said: “Insurance fraud is the scourge of honest insurance customers who make genuine claims. Insurance cheats can be ingenious, and are constantly looking for new scams to exploit, which is why the industry makes no apology for spending around £250m a year on measures to tackle this crime.
“Spearheaded by the Insurance Fraud Bureau and the Insurance Fraud Enforcement Department, there will be no let-up in the industry’s determination to root out fraudsters and press for the stiffest possible penalties for these cheats.”
Ben Fletcher, director of the Insurance Fraud Bureau (IFB), said: “Today’s announcement by the ABI shows that organised motor fraud is still a big problem and one that the insurance industry, working together with the police, will continue to tackle.
“Fraudsters are constantly reinventing themselves and application fraud and liability are areas of growth that we now need to focus on.”
Detective chief inspector Andrew Fyfe, head of IFED, commented: “The actions of insurance fraudsters increases premiums for honest customers and costs the insurance industry millions of pounds a year.
“Not only that, certain tactics used by these fraudsters, such as crash for cash claims, can put the lives of innocent members of the public at risk. For this reason, IFED continues to come down hard on insurance fraudsters; achieving convictions and other sanctions against these criminals on a weekly basis.”
In response to the statistics, insurers have reiterated their commitment to tackle fraud.
Allianz’s fraud manager, James Burge, stated that it is “clear from the figures released by the ABI today that insurance fraud remains a top priority for insurers”.
He added: “It’s important that we continually focus our efforts on the changing landscape of application and claims fraud, which evolves as new protective measures are put in place.
“It’s also vital that the courts continue to raise the bar in terms of handing down the hardest judgements possible for insurance fraud.”
According to Burge, Allianz has recently brought together its application and claims fraud teams in order to maximise prevention and detection capabilities.
In addition, Michael Kelly, head of underwriting and fraud at Axa Insurance, noted that the latest figures were a sign that insurers have improved their controls and are more willing to report their findings.
He continued: “That is encouraging but we can go further, as an industry, to tackle this issue. We must make better use of the data available to us, especially large datasets.
“The IFB can make these available directly to insurers, enabling them to use that information in a way that is bespoke to the fraud problem.”
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