Figures released by the Association of British Insurers (ABI) in July show that there was a reduction in fraudulent claims and costs in 2016. Overall there was a reduction in organised and pre-meditated fraud which was offset slightly by an increase in opportunistic (unplanned – this could be a spur of the moment incident or adding something fraudulent to a genuine claim, such as whiplash in a car crash where you weren’t injured or inflating the value of loss) fraudulent claims.
In 2016, 41% of fraudulent claims were labelled opportunistic, which is up from 21% in 2014 according to information from Keogh’s. Interestingly, Birmingham has been named as the city in the UK with the highest level of opportunistic fraud.
Organised fraud was down around 30% with around 15,000 cases on 2015, the estimated financial value was £174 million. This is mainly due to the hard work and improved experience and methodology of both the Insurance Industry (IFB, the Insurance Fraud Bureau) and the police (IFED, the Insurance Fraud Enforcement Department). There is a better sharing and recording of data, increasing the chances of both detecting fraud as a team or in isolation.
Often we are reading about how they have caught those committing or assisting with fraud in various manners. From organised criminal gangs staging cash for crash gangs deliberately having road traffic accidents, or other fake liability claims. To doctors signing off on injuries that never occurred, such as whiplash or charging for treatments that were never provided. Or vehicle hire companies over charging or supplying false records, sometimes without even having supplied a vehicle. Even claims management companies or Solicitors encouraging people to lie or to exaggerate their losses or even make them up.
Sometimes, the fraud is even committed within the insurance company or brokers. Sadly there are incidents where claims teams are authorising payments for incidents that never happened or are selling details of third parties. In extreme cases sometimes a criminal gang may have access to all of these areas.
Less frequently but no less seriously, we come across ghost brokers. These are people or companies that pretend to be insurance brokers and take money for insurance policies which are never put into force. So not only has the customer paid for nothing, but can find out they have no cover in event of a claim and in some instances like motor insurance, find themselves driving illegally because they have no valid cover in force!
All brokers and intermediaries that conduct insurance need to be regulated and authorised by the Financial Conduct Authority (FCA) or be an appointed representative (AR) of someone who is. This needs to be stated on their website and letter head with their reference stated. The FCA has a register of all firms in the industry and states what activities they have permission to provide for customers to check.
The register can be found here: https://register.fca.org.uk/