However, one fraud worth £1.2m was detected, and around 1300 fraudulent cases are exposed every day
The average value of a fraudulent insurance case has topped £12,000 per case as the ABI releases its annual fraud figures.
The total number of fraudulent claims and applications detected in 2018 rose by 3% to 469,000 compared to 2017, with their value up 6%.
This equates to around 1,300 found every day, with just two being convicted or cautioned per week.
Some high-profile cases investigated by the City of London’s Insurance Fraud Enforcement Department (IFED) included sixteen people involved in a crash for cash crime gang who received a collective 33 years in jail sentences, and a man convicted of selling fake motor insurance who was jailed for two years.
Those notable cases include:
- The ringleader of an organised gang that staged motor crashes to con nearly £1.2 million from insurers was jailed for six years. Other gang members also received jail sentences totalling nearly 33 years.
- A criminal gang made fake claims of nearly £1m for damage and lost earnings from restaurants they said had been flooded by burst water pipes. It turned out that they had deliberately smashed the water pipes and that the restaurants had never been open for business. The five men were jailed for a total of 14 years.
- A preacher, and self-styled bishop, was jailed for 10 months when found guilty of staging a motor crash. He fraudulently bought motor insurance using another person’s details, then contacted the insurer saying he had crashed the car into another vehicle. It turned out that he owned the vehicle he said he had crashed into, and that the car he said he had been driving was in the church car park at the time.
- An award-winning hotelier was caught out claiming £34,000 in disability income from his insurer saying that his depression and anxiety meant he could not work, when he was in fact running a hotel. He received a 14-month suspended prison sentence.
- Earlier this year, a woman who staged a fall over a crate in a supermarket in West Yorkshire to claim compensation, received a 21-month suspended jail sentence.
What trends were found?
Unsurprisingly, application fraud was the most common fraud, with 371,000 of the 469,000 fraud cases detected being before a policy was even taken out.
The number of fraudulent claims detected fell 6% on 2017, while the number of dishonest applications rose by 5%. And the value of those dishonest claims fell just by less than 1% on the year before at £1.2bn.
Motor insurance fraud still reigns with 55,000 of the 98,000 fraudulent claims in the motor sector, 80% of which involved personal injury, which is hoped to be ousted once the new reforms kick in next April.
The number of property frauds dropped slightly to 20,000 compared to 2017, but the value of those frauds rose 11% to £115m.
“Scourge of honest customers”
Mark Allen, ABI’s manager of fraud and financial crime, said: “Insurance fraud is the scourge of honest insurance customers who make genuine claims. Insurance cheats can be ingenious, and are constantly looking for new scams to exploit, which is why the industry makes no apology for spending around £250m a year on measures to tackle this crime.
“Spearheaded by the Insurance Fraud Bureau (IFB) and IFED, there will be no let-up in the industry’s determination to root out fraudsters and press for the stiffest possible penalties for these cheats.”
Detective chief inspector Andrew Fyfe, head of IFED, said: “The actions of insurance fraudsters increases premiums for honest customers and costs the insurance industry millions of pounds a year. Not only that, certain tactics used by these fraudsters, such as crash for cash claims, can put the lives of innocent members of the public at risk. For this reason, IFED continues to come down hard on insurance fraudsters; achieving convictions and other sanctions against these criminals on a weekly basis.
“Whilst we are pleased more and more fraudsters are behind bars, we will not be resting on our laurels. We will continue our dedicated work, alongside our partners in the insurance industry, to find those committing fraud and put them before the courts to ensure justice is done.”
Finally, Ben Fletcher, director at the IFB said: “Improved reporting and easy access to shared intelligence are helping IFB members identify and close-down sophisticated criminal groups intent on harming businesses and their customers.
“Although today’s announcement suggests the current strategy to tackle organised fraud is working, the broader picture is more complex.
“The nature of organised fraud is changing as criminal groups seek to exploit opportunities in areas such as application, property and liability fraud where collaboration and enforcement are less developed.”
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