ABI: Recession Britain – insurers detecting record amounts of fraudulent claims
Insurers are detecting record levels of fraudulent insurance claims – 2,000 every week, worth £14 million – according to figures released today (16 April) by the ABI (Association of British Insurers). Yet one in five people would still be tempted to cheat on their insurance, despite the likelihood of being caught, facing trouble in obtaining financial products in the future, and getting a criminal record.
ABI figures show that in 2008:
– 107,000 fraudulent insurance claims were exposed, a rise of 17% on 2007. The value of these claims, at £730 million, rose by 30% on the previous year.
– Dishonest claims on home insurance were the most common, with 55,000 false or exaggerated claims detected. By value, fraudulent motor insurance claims were the highest, with £360 million saved.
– 4% of all claims by value (excluding life insurance) were fraudulent, compared to 3% in 2007.
In a separate survey of 3,000 adults carried out for the ABI by YouGov, one in five people admitted that they would not rule out making a fraudulent claim in the future.
Nick Starling, the ABI’s Director of General Insurance and Health, said:
“Fraud thrives in a recession, so insurers are intensifying their crackdown on insurance cheats. Fraud adds an extra £40 a year to the average premium, which is why the harder we make it for the cheats, the more competitive premiums will be for honest customers. Cheating on your insurance really does not pay – you will get caught, future insurance will be more expensive and, along with credit, harder to obtain. The only thing you are likely to gain is a criminal record.”
Insurance cheats caught out in this crackdown include:
– A policyholder who claimed that his car had been stolen following a mugging. Investigations revealed that he had actually sold the car to a friend.
– A car was reported stolen and recovered burnt out. However it transpired that the vehicle had been set alight before the policyholder reported that it stolen. The policyholder received a criminal conviction.
– A woman claimed for a lost engagement ring, and was told that her policy did not cover her outside of the home. So she extended the cover, and the next day claimed for the loss of the same ring.
– ENDS –
Notes for Editors
1. Enquiries to:
Jonathan French 020 7216 7392 (Mobile: 07958 330 480)
Malcolm Tarling 020 7216 7410 (Mobile: 07776 147 667)
Erfan Hussain 020 7216 7411 (Mobile: 07712 841 184)
Kelly Ostler-Coyle 020 7216 7415 (Mobile: 07968 364 302)
2. Fraud detected in 2008:
Class of Insurance Number of frauds detected (estimated) Value of frauds detected(estimated)
Motor 35,300 £360 million
Household buildings 55,400 £110 million
and contents
Travel 4,300 £5 million
Creditor 2,500 £19 million
Commercial 9,800 £240 million
Total 107,200 £730 million
3. Other examples of detected fraudulent insurance claims include:
Household insurance
A customer’s coal fire exploded, showering her living room carpet with coal, but causing no damage. Several weeks later she claimed under her household policy for a large burn mark on her carpet, which it is alleged was caused by the explosion. However the burn was under her sofa. When asked to explain how a large ball of flame travelled past her and lodged under the sofa, the claim was withdrawn.
Bogus or exaggerated injuries
A man received £9,000 in compensation for a broken ankle he claimed resulted from tripping over a pothole. However, further investigation revealed that the injury was actually incurred while playing football. He was jailed for nine months.
A woman reported her husband for exaggerating his injuries following a car accident hours after he left her having collected a £385,000 compensation settlement.
A keen amateur footballer claimed to be unable to work following a back injury. His fraud was exposed when a local newspaper carried his picture after he was named as his football club’s player of the year.
Fake vehicle theft
A policyholder claimed that his car had been stolen from a car park. The car was found at the bottom of the cliff, with no signs of forced entry. A local newspaper carried a picture of the car at the bottom of the cliff two days before the alleged theft. The policyholder admitted that he had pushed the car over the cliff, and planned to use the insurance payout to pay of his debts.
Deliberate damage
A claim for replacing a lounge suite following accidental spillage of paint was rejected when forensic tests showed that the paint had been deliberately applied.
Medical costs that are not covered
The ‘recovery expenses’ claimed by a man following an illness while holidaying in West Africa, were declined, as they were for ‘services’ at a local brothel!
4. The ABI is the voice of the insurance and investment industry. Its members constitute over 90 per cent of the insurance market in the UK and 20 per cent across the EU. They control assets equivalent to a quarter of the UK’s capital. They are the risk managers of the UK’s economy and society. Through the ABI their voice is heard in Government and in public debate on insurance, savings and investment matters.
5. An ISDN line is available for broadcasts.
6. More news and information from the ABI is available on our web site, www.abi.org.uk.
-01.png){kind=spacer}