On 13 July 2015, the Association of British Insurers (the “ABI“) published a news release revealing that insurers uncovered around 350 fraudulent claims per day in 2014. The ABI calculates that these claims were worth £3.6million and that these savings will directly benefit honest customers keen to keep premiums low. Whilst the number of fraudulent claims is rising, the ABI was also able to demonstrate some victories in the war against fraudsters.
In its published figures, the ABI calculates that the 130,000 fraudulent claims were detected in 2014; this figure is 9% higher than the total detected in 2013, with a 3% increase in the value of the fraudulent claims. Dishonest motor insurance frauds were the most common and of highest value in 2014. However, of particular note was the 75% increase in the number of fraudulent liability insurance claims. The ABI explains this rise as a result of the industry’s greater focus on bogus liability claims, including industrial deafness. The ABI lamented the impact increasing fraud has on honest customers, who ultimately have to pay for the fraudulent minority.
However, there is positive news for honest customers. The average comprehensive motor premium is down 5% and the average home contents premium is down 3%. The number of detected fraudulent property insurance claims has fallen too, which in the ABI sees as evidence of its deterring message having an impact. James Dalton, ABI’s Director of General Insurance Policy, commented that “Insurance cheats are now more likely to get caught than ever before…and face long-lasting and serious consequences. As well as the possibility of serving a custodial sentence, they will find it difficult to obtain vital financial services such as mortgages and loans, future job prospects are likely to be adversely impacted and family relationships suffer.”
The ABI also praised the Government initiatives such as the Insurance Fraud Task Force and the Insurance Fraud Register. Ben Fletcher, Director of the Insurance Fraud Bureau, believes that “effective collaboration and partnerships with law enforcement, government and public sector organisations” is essential in making a positive impact in the war on fraud. The industry itself can initiate a number of self-help mechanisms including raising awareness with the public that fraud will be detected and fraudsters will be pursued. There is also the challenge to insurers as to whether they are willing to cooperate and share information with each other for the collective good of detecting fraud.