The ABI published figures this morning which states a new fraud is detected every minute in the UK 

While many industry figures have been encouraged by the latest fraud results released by the ABI this morning, they all see room for improvement.

The ABI published its latest fraud figures today, which stated that a new case of insurance fraud is detected every minute in the UK.

Among the most noteworthy figures taken, the ABI says:

  • A total of 562,000 insurance frauds were detected by insurers. Of these, there were 113,000 fraudulent claims and 449,000 dishonest insurance applications.
  • The number of dishonest insurance claims, at 113,000, was valued at £1.3bn. The number was down 8% on 2016, while the value rose slightly by 1%.  
  • The number of organised frauds, such as staged motor accidents, fell 22% on 2016, with frauds worth £158m detected. 
  • The value of detected fraudulent motor insurance claims, at £775m, rose by 4% on 2016. The number of these frauds, at 67,000, showed a small rise. 
  • Fraudulent property insurance claims fell. The number detected dropped by 11% on 2016 to 22,000, with a value of £100m.

Encouraging but needs improvement

The industry has said that the numbers are improving slightly, but more needs to be done.

Teresa Russell

Detective chief inspector Teresa Russell (left), head of the City of London Police’s Insurance Fraud Enforcement Department (IFED), said: “While these figures are encouraging, IFED is well aware that the fight against insurance fraud is an ongoing one and that fraudsters are constantly trying to come up with new ways to defraud the industry and members of the public.”

Mike Swanborough, chief executive at Aoi Nissay Dowa Insurance (ANDIE Group) said: “An 8% annual decrease is a promising start, but the rise in value to £1.3 billion shows room for improvement across the industry.

”Clearly, there is still work to be done to combat fraud. But as criminals become more creative, the industry is leveraging increasingly sophisticated techniques to stop fraudsters in their tracks.”

Meanwhile, Andrew Twambley, spokesperson for Access to Justice (A2J) said: “We welcome the news that dishonest claims have fallen 8%, and that the number of staged accidents has also fallen sharply, by 22%.

Andrew Lowe

”A twin strategy, where industry players share data to identify fraudsters, then offenders are prosecuted in the courts, is the best way to deal with this form of crime.”

Andrew Lowe (right), director, Motor Insurance at LexisNexis Risk Solutions said: “The ABI’s data shows the sheer scale of application fraud faced by motor insurance providers.

”This supports our own research which found 7 out of 10 think it is acceptable to manipulate the information they provide when obtaining a quote for motor insurance from a price comparison site with 50% saying it was “completely acceptable.

Civil Liability Bill- the answer?

Some industry figures took the results as an opportunity to either blast or get behind the Civil Liability Bill, which is currently making its way through parliament.

Donna Scully, Carpenters

Carpenters Group director, Donna Scully (left) said that the results show that ”fraud needs to be vigorously tackled on a variety of fronts,” but it is a ”crying shame that insurers are choosing the path of increased involvement of CMCs which will significantly heighten the risk of fraud.”

As part of the whiplash reforms, claims management companies will be allowed access to the litigation in person (LIP) portal, which is something that is not allowed at the moment.

On the other hand, Iain Davison (right), partner at Weightmans, says it will be some time whether the bill will show any true value in the fight against fraud.

Iain Davison - Weightmans

He commented: ”It’s a positive start but despite this, the number of detected fraudulent motor claims has increased in number and value, and these figures will strengthen calls to reform the claim process further.

“The Civil Liability Bill is due to be implemented from April 2020, but it will be some time before we will know if those reforms reduce the costs to the industry of preventing fraud.”

He also applauded the IFB and IFED for their efforts in ”securing a healthy number of convictions and the resulting impact on organised fraud.”

What is the answer?

Twambley (below) says the definition of suspected fraud is ”too broad”.

Andrew twambley

”For example,” he said. “According to the ABI, suspected fraud occurs where a claims handler challenges the applicant to clarify key information or provide additional information or documentation.

”The claim is then badged fraudulent and continues to be defined as such if the claimant withdraws the application, fails to provide documents or ceases communication with the insurer. Maybe the claimant became fed up with the cumbersome process, or felt that the insurer’s requests for information was too much hassle. That is not fraud.”

Miles Hepworth FOIL

Miles Hepworth (right), member of the Joint Fraud Sector Focus Team at the Forum of Insurance Lawyers (FOIL), and a fraud partner at DWF says: “It would indeed seem that we are seeing a turn from the more organised, staged fraud to more opportunistic of famed fraud.

”There is a real need for the process to be reformed to allow for more disclosure and visibility around claims farmers and the sourcing of claims as well as more robust regulation of claims management companies.

Mike Swanborough cropped

Meanwhile, Swanborough (left) believes telematics has a big influence over the fight.

He said: ”Telematics is a key weapon in the fight against fraud. Our telematics data recently helped identify and thwart a fraudulent motor insurance claim of nearly £90,000.

“Telematics is popular for young drivers looking to cut costs – and it also helps reduce the billions of pounds worth of fraud that drive up premiums for honest policyholders.

”Telematics data can provide the final piece of the jigsaw in understanding the true makeup of a collision.”

Nicholas Edge, senior fraud manager at Swinton, commented: ”As the insurance buying process increasingly takes place online and transactions are handled via digital platforms, this will only become more pressing.

”Thankfully the technology baked into those digital platforms should improve fraud detection rates, intercepting attempts to buy policies fraudulently in the first place and reducing fraud rates and ultimately costs for policyholders.”

Finally, IFED’s Teresa Russell concluded: “Insurance fraud is not a victimless crime and dishonest claims are felt by everyone. The vast majority of people are honest with their insurer, but insurance cheats have no qualms about making false claims and simply don’t care that their fraudulent actions inevitably increase premiums for everyone else.

“Motor related insurance fraud makes up a large number of the cases that IFED manage and with opportunistic claims costing £775m last year, it is important the unit continues to work closely with industry partners to prevent and detect this crime type.”