Fraud has always been an issue in the insurance industry, but the outlook for 2025 looks to be more turbulent, as spiralling consumer costs and advanced technologies brew the perfect storm. Here’s some analysis from Quotezone;
In 2023, nearly 85,000 fraudulent claims were detected, an increase of 16%, with an estimated worth of £1.1 billion.
As of the year ending June 2024, fraud was the number one crime in England and Wales.
A growing trend which has emerged amongst fraudsters is low fraud, or ‘lower-level’ or ‘lower-value’ fraud, and it poses a real threat.
Awareness of fraud is at an all-time high and due to new advanced security protocols, some criminals are having to resort to this lower-level crime, targeting individuals and smaller businesses with a higher volume of smaller claims and attacks, in a bid to go undetected.
There is a plethora of these so called lower-level crimes, from faking a claim for a small amount of money, to the misuse of resources – but it doesn’t make them any less serious.
The penalty for fraud in the UK, under the Fraud Act 2006, is up to 10 years in prison and unlimited fines, depending upon the severity of the offences.
The most common insurance fraud is exaggerated loss, where the cost of the claim is ballooned above the true value in a deliberate attempt to secure additional funds, amounting to £407 million in fraud a year.
There are growing concerns that the fraud surges we’re currently experiencing are linked to the escalating financial pressures across the UK. Household bills are set to rise to unprecedented heights, with fluctuating inflation and a potential US trade war making for unpredictable times.
A recent Quotezone survey revealed a third of UK consumers are considering giving up driving altogether due to expensive insurance costs. Driving without insurance is a key type of fraud and one of the biggest motoring offences in the UK – number one in Northern Ireland, with nearly 6,000 offences last year. As a result, the insurance industry is having to invest more in fraud protection measures, which in turn, will likely add to premium costs, perpetuating the storm.
Greg Wilson, CEO and insurance expert at Quotezone.co.uk comments: “It is estimated that honest consumers in the UK, pay an additional £30 on their car insurance premium to cover for those drivers on the roads without insurance.
“As the cost-of-living continues to stretch households across the country, consumers need protected from spiralling costs and the criminal behaviour of others.
“Price comparison sites like ours have advanced security measures to help protect our customers and our insurance providers – with bespoke fraud prevention tools and advanced fraud data detectors.
“The use of AI and advanced technologies however, is proving a double-edged sword, while it increases efficiencies and protection measures across the insurance industry, it also makes it easier for criminals to get away with fraud, creating a surge in application fraud, with fake identities, fake documentation and even fake evidence to support claims.
“With the industry looking at legal measures and preventative technologies to protect against fraud, there’s also a need to increase public awareness and collaboration amongst insurance providers. Open communication is a powerful tool to eradicate these underhand behaviours.
“We also need to attack some of these key issues at source, such as, how do we create affordable insurance for every driver?
“The UK government has created a motoring task force, bringing industry experts and consumer champions together to assist on important issues in the car insurance industry, such as high premium costs. Also, a recent report shows evidence that the whiplash reforms, with their stricter legislation, are actively reducing fraudulent claims, which in turn is reducing insurance premiums.
“However, no one is immune from fraud – businesses, customers and insurance providers alike will need to remain diligent, support best practices and raise awareness – making active steps to support consumers on security, savings and quality insurance products.”
Quotezone.co.uk take fraud and fraud protection seriously, helping over 4 million customers every year find competitive insurance products and save money.
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