Application fraud increases by 11%, and false insurance claims by 22.6%

Insurance fraud levels continued to rise in 2013, bucking the trend of an overall drop in all other areas of fraud, according to fraud prevention service provider CIFAS.

The latest CIFAS Fraudscape Report found that insurance fraud claims increased by about 22% in 2013 compared to 2012, despite an 11% fall in overall fraud figures.

Application fraud remains the biggest concern to the insurance industry, accounting for more than 90% of all frauds reported to the CIFAS database last year. The number of these cases has also continued to increase - by more than 11% in 2013 compared with 2012, and year on year rises since 2010.

“There were far more instances of people giving false current addresses on applications for insurance, probably in order to gain a lower premium,” the report stated. “Also up were the number of instances of someone ‘fronting’ an insurance policy – taking out insurance in the name of an individual who was not going to be the main driver as they were more likely to be approved or get a lower premium. This accounted for almost 16% of identified application frauds.”

The use of false ‘no claims discount’ entitlement was another area of increase, accounting for almost 15% of cases, up from just over 6% in 2012.

False insurance claims is also becoming an increasing problem, with 22.6% more cases reported in 2013 than in 2012. Identify fraud in insurance also saw an 18.5% increase year on year. The only area of insurance fraud to see a decrease was in the ‘misuse of facility fraud’.

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