New figures reveal insurance companies are thwarting fraudulent claims worth £25million each week
According to the ABI, a focus on stamping out organised fraud carried out by highly sophisticated criminal gangs has contributed to a fall in the number and cost of fraudulent insurance claims detected in 2016.
Last year there were 125,000 dishonest insurance claims valued at £1.3 billion recorded, down 5% on 2015 but showing there is still much to be done.
The level of organised fraud fell by nearly 30% compared to 2015, with 15,000 frauds valued at £174 million detected. This fall can be attributed to work being carried out by the Insurance Fraud Bureau (IFB) and the Insurance Fraud Enforcement Department (IFED), a specialised police investigation unit, in exposing crash for cash staged accidents.
Both the number and value of detected motor frauds fell. The number, at 69,000, fell 4% on 2015 while the overall value (£780 million) was down 5%. A drop in the number of organised frauds, such as crash for cash scams, contributed to this reduction.
However, it’s not all good news as there was a small rise in opportunistic motor insurance frauds.
While the overall number (110,000) remained unchanged on 2015, 2016 saw a rise in opportunistic motor insurance frauds uncovered – 57,000 compared to 54,000 in 2015.
According to the ABI, opportunistic fraudsters will generally be otherwise law-abiding citizens who are encouraged by disreputable claims management companies.
While some of the more extreme examples of fraudsters included:
- Four members of a criminal crash for cash gang who were sentenced to over 37 years for their part in a staged accident that resulted in the death of a passenger in the vehicle they targeted
- Following a five year investigation, six people were convicted of a series of sophisticated frauds, including setting up a claims handling firm to deal with bogus personal injury claims, and making a false business interruption claim worth nearly £600,000. They also defrauded funeral plan companies
- A fraudster who sold non-existent car insurance policies in restaurants and internet cafes was ordered to pay back £253,000 he had made from the crime.
James Dalton, ABI’s director of General Insurance Policy, said: “The vast majority of insurance claims are genuine, with millions being paid to customers every day. So it’s great to see we have achieved real success in tackling organised fraud in the last year.”
The ABI, IFB and IFED all take this matter very seriously, showing in the severity of the punishments for any type of fraud as many times these crimes result in lengthy prison time or harsh fines.