Opportunity Knocks For UK Insurance Fraudsters

Sedgwick, a leading global provider of technology-enabled risk, benefits and integrated business solutions, has reported a significant increase in low-value and opportunistic claims fraud in 2023. Could be the cost of living, maybe a general drift towards a more lawless attitude in the UK where driving uninsured, blocking the road, shoplifting or other low level crimes are all regarded as “legit,” according to your point of view. Given the steep rises in some car insurance premiums in 2023 it’s fair to assume that many people will regard insurers as being “fair game” in future.

Here’s the word from Sedgwick:

Rising levels of fraud

Of the home claims Sedgwick investigated in Q2, 21% were for Accidental Loss (AL) claims, 13% for Accidental Damage (AD) claims and 32% for theft claims. AL claims flagged as suspicious have risen 15% in 2023 against 2022. And following investigation, the fraud rate for these claims has likewise risen by 19%. This year, there’s also been uplift in suspicious lower-value theft claims, with a 39% increase in the number of claims in which concerns have been identified, and an investigation requested.

Steep rises in fraudulent theft claims are unusual, as police involvement can function as a deterrent. However, these claims often relate to cases where the customer has been the victim of a genuine theft incident, but after the police have left embellishes the value or number of items stolen. 70% of suspicious theft claims in Q2 were for losses under £1,000, and at this level investigations are initially handled via a phone or video interview. At this stage, we’ve observed a 65% ‘walk away’ rate, suggesting the claim is fraudulent, and won’t hold up to scrutiny.

The changing face of fraudsters

The profile of claimants involved is also changing, with an 18% increase in company directors opting to claim against their domestic insurance instead of their commercial policy in the first half 2023, compared to the same period in 2022. Unlike commercial claims, domestic claims are typically perceived as lower risk, so the increase has prompted fraud investigators to scrutinise these cases closely, taking measures such as examining the financial status of a business when appropriate.

Ian Carman, director of investigation services at Sedgwick, said:

“Whilst low-value claims account for most of the increase, these add up, and present significant risk to insurers and policyholders. Fraudulent accidental loss claims may be rising because from the perspective of the would-be fraudster there’s nothing to see. It’s easy to say something’s been lost, but hard to prove they’re still in possession of an item they claim is lost.

In cases where a genuine event has occurred, but losses are exaggerated to seek false damages, policyholders expose themselves to significant peril, not just for the fulfilment of the claim, but for their ability to obtain insurance in the future.”