Investigations into suspicious claims for commercial and personal lines have increased since the start of the economic downturn.
The number of potentially fraudulent claims being investigated has risen sharply since the start of the credit crunch, a number of loss adjusters have reported.
They warned that the trend was set to continue as the economy slows.
One loss adjuster, Cunningham Lindsey, said the number of inquiries into “high-risk” claims had risen by 15% in commercial lines business since January 2008. Inquiries had increased by 10% in personal lines claims.
In the case of creditor insurance, the number of inquiries into high-risk claims had risen by 35%, the loss adjuster said.
Cunningham Linsdey defines a high-risk claim as one that does not “add up”, is statistically unusual or has indicators of concern.
GAB Robins also reported an increase in suspicious claims, particularly in relation to the theft of contractors’ plant.
Robert Binning, director of major and complex loss at GAB Robins, said it was too early to put a figure on the rise in suspicious claims related to the economic downturn.
He said it was not surprising that the construction sector was first to see an uplift in suspicious claims given the difficult position it was in.
Binning added that an increase in potentially fraudulent domestic and business claims could be expected as the economy slowed further.
Chris Aplin, special investigations, product and client development director at Cunningham Lindsey, said the credit crunch was a key contributory factor to the increase in suspicious claims.
But he also pointed to the fact that the industry was getting better at recognising if a claim was suspicious.
Aplin attributed the large rise in the number of high-risk creditor insurance claims to that fact that creditor insurers had not previously investigated claims owing to the profitability of the business.
Norwich Union said its figures also showed an increase in the amount of fraud detected.
Andrew Buck, fraud manager at Norwich Union, said: “Figures for the beginning of this year are also showing a slight increase on last year, but it is really too early to say whether this is down to the current economic climate. Clearly, when times are tougher crime does increase, but we wouldn’t expect the effects of the credit crunch to be seen yet in our fraud figures. This time next year we may have a clearer picture.”
Credit insurance on the up
The ABI has revealed that the number of companies taking out credit insurance increased by 10% during 2007. This is the third consecutive year that the market has grown, with a 40% rise since 2004.
Nick Starling, director of general insurance at the ABI, said: While the economy is in decline, trade credit insurers expect to pay out more claims during 2008, as business insolvencies rise.