Cifas, the UK’s leading fraud prevention service with over 450 members, has released new figures showing a marked increase in the number of individuals committing insurance fraud with false claims. Between 2017 and 2018, there has been a nationwide increase of 27% in fraudulent insurance claims.
The new figures reveal that Cifas members identified household insurance fraud and motor insurance fraud as the two biggest causes of false claims – with a 52% and 45% increase respectively.
Meanwhile, there is some good news, in the shape of an overall decrease in another form of insurance fraud: fronting an insurance policy, which as most of us know within the industry is a case of parents lying about true car ownership/usage for their children’s benefit. Cifas members reported over 300 cases of fronting in 2018, with the data showing an 18% increase in the proportion of 21-30 year olds conducting this type of fraudulent activity.
The release of these alarming statistics marks the launch of Cifas’ ‘Faces of Fraud’ campaign. The campaign sheds light on the daily temptations consumers face to commit fraud: the lies, exaggerations, deceptions and “seemingly” harmless opportunities to make some quick cash or get a better deal that are actually criminal acts.
Cifas is therefore urging people to stop, think and consider the consequences of making false insurance claims or fronting insurance policies – which can be far more serious than many imagine. Consequences can include non-payment of claims; cancellation of the insurance policy; individuals having to pay costs that arise from an accident; a record with Cifas and the Insurance Fraud Register (IFR), making it more difficult to obtain insurance and other financial services. The case could also be reported to the police for investigation: potentially leading to a criminal conviction and a prison sentence.
Chief Executive Officer of Cifas, Mike Haley, says:
“False insurance claim fraud and fronting insurance policies fraud are often seen as an easy way to make a bit of money without hurting anyone. Yet the idea that fraud is a victimless crime is completely false. First, false insurance claims and fronting insurance policies are illegal. They can impact your life and career, making it near-impossible to buy insurance in the future and can even lead to a criminal record. Second, committing fraud hurts everyone: your neighbours, your friends, people in the area, and the UK as a whole. Insurers have to spend longer reviewing insurance claims and policy requests, premiums go up, and everyone loses out.”
“As the rise of false claims in household and motor insurance shows, many people are seemingly unaware of the risks they’re running and the consequences it can have by committing everyday fraud. While the overall downturn in fronting insurance policies is a positive sign, the fact that young people are increasingly more likely to commit that type of fraud highlights the need for continuing education. More needs to be done to raise awareness about the harm of fraud and financial crime.”
Insurance Edge Comment;
One of the big growth areas recently has been fake holiday sickness claims and insurers need to do more to automate social media searches, phone location data and collate patterns of suspicious data activity so that fake claims can be exposed. Equally, those consumers willing to share more of their personal data, in order to prove they are having a genuinely nice, and healthy, holiday need to be rewarded with cheaper travel insurance.