The Association of British Insurers (ABI) reports that industry action to stamp out organised insurance fraud, such as ‘crash for cash’ staged motor accidents, has contributed to a slight fall in the number and cost of fraudulent insurance claims detected in 2016, which totalled £1.3bn over the year
ABI figures show insurers detected 125,000 dishonest insurance claims, 5% fewer than in 2015, while their value fell 3%.
The level of organised fraud fell by around 30% on 2015, with 15,000 frauds valued at £174m. The trade association says the 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.
ABI warns, however, that there are signs 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.
Both the number and value of detected motor frauds fell over the year. There were 69,000 frauds, 4% down on 2015, while at £780m their value was down 5%.
However, 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. ABI says these are often also encouraged by disreputable claims management companies, citing the resurgence in whiplash-style claims reported to the government’s Compensation Recovery Unit.
The number of property insurance frauds dipped 4% on 2015 to 26,000, while their value fell 2% to £106m.
James Dalton, ABI’s director of general insurance policy, said: ‘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 motor insurance 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.’
