Deception, exaggeration and invention – the cost of insurance fraud
Insurers are fighting back in the war against fraud. With the cost of insurance fraud now estimated to be £5.2 million every day, according to a report published today (16 July) by the ABI, insurers are detecting more of the fraud being committed.
The report highlights that:
- The cost of undetected fraudulent general insurance claims is now £1.9 billion a year, up 24 per cent from £1.6 billion two years ago.
- Insurers are detecting more of the fraud being committed. Last year, frauds worth £730 million were detected and prevented – a 30 per cent increase on 2007.
- Insurance fraud now adds, on average, an extra £44 a year to every household’s general insurance costs.
More people are being caught lying or withholding relevant information in attempts to get cheaper insurance.
Nick Starling, the ABI’s Director of General Insurance and Health, said:”There is no hiding place for insurance cheats. Honest customers should not have to pay for the fraudsters. The tough approach taken by insurers to protect honest customers means that they are detecting more of the fraud committed. Closer scrutiny of proposal forms and claims, as well the exchange of information through industry-wide databases, is tightening the net on the cheats. Getting a criminal record, as well as difficulty in obtaining and more expensive insurance and credit problem await anyone who sees insurance as a soft touch.”
The ABI also commissioned independent opinion research into public attitudes towards insurance fraud. The survey of over 3,000 adults revealed that:
- 16 per cent would not rule out making an exaggerated insurance claim.
- Just over four in 10 (44 per cent) think it acceptable or borderline behaviour to increase the value of an item when claiming. Three in 10 feel the same way about overstating the extent of any damage being claimed for.
- Those in the North East and the West Midlands appear the most tolerant towards insurance fraud. One in four in the North East would not rule out making a fraudulent claim. And more people in the North East and the West Midlands see inflating the value of an item, or adding an item to a claim, as acceptable or borderline behaviour than elsewhere in the UK.
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