COLUMN: Taking tough action on the disease of insurance fraud
Insurance fraud has become a disease that is infecting my industry and damaging our relationship with customers. It adds an estimated Â£25 - Â£40 to everyone's policy. '¨In 2014, insurers uncovered 130,000 fraudulent claims worth Â£1.32 billion. '¨Stamping out fraud is part of the public confidence agenda and should have the highest priority within the insurance profession. So the insurance industry is working hard to confront the fraudsters.
Crucially this means taking tough action in order to protect honest customers. This has entailed the creation of working partnerships with law enforcement, government and public sector organisations, which is having an impact. The Insurance Fraud Bureau is also working with the industry and police to detect fraudsters and bring them to justice. Insurers are fighting back by investing at least £200 million each year to identify fraud.
The most common frauds involve home insurance with 66,000 bogus or exaggerated claims detected, followed by dishonest motor insurance frauds - with 40,000 frauds uncovered. This includes ‘crash for cash’ scams where motor accidents are deliberately staged. What’s more, staged car accidents carry a safety risk to innocent members of the public. Sometimes, fraudsters deliberately slam their brakes on so that an innocent motorist hits them. In 2014 two men were been jailed for orchestrating a series of “crash-for-cash scams”, including one involving a two tonne bus with up to 40 passengers hitting a car in Burngreave,. The court heard how the crash, in June 2011, was just “the most extreme example” of a series of fake collisions. Both men were jailed after attempting to net £500,000 from fraudulent claims.
Personal injury claims against employers or local authorities carry a similar risk. Some people will invent incidents or exaggerate the effects of a genuine claim in an attempt to secure payment beyond which they are entitled to. Examples range from individuals greatly embellishing an injury suffered at work, through to organised activity where people are encouraged to invent an injury and initiate a claim.
The consequences for insurance cheats can be severe. The simplest piece of information can be the key to uncovering a fraud. There will always be a lie in the evidence and the challenge is to find the discrepancy. It is essential to verify every piece of information provided to establish evidence, which is, in any case, good claims handling. So the message is clear. We owe it to the honest paying public to combat fraudsters and will always take the toughest possible action against those who attempt to defraud us.