Gangs cash in as we turn a blind eye to insurance fraud

Two thirds wouldn't shop a fraudster

Updated: 

front part of a crashed car...

Aviva, the UK's largest insurer, said that last year it saw an incredible £110 million worth of insurance fraud - at a rate of 45 claims per day. This was up a shocking 19% in just one year - fuelled by a surge in fraud by organised gangs. Alarmingly the insurer added that we're not helping the situation, because two thirds of people are turning a blind eye to insurance fraud they see or hear about.

And it will end up costing all of us dear.

Trends

Aviva said that it had seen a huge range of fraud - from the exaggeration of genuine claims or injuries to entirely fictitious claims and accidents. However, it added that increasingly, insurance fraud is carried out by organised gangs.

Tom Gardiner, Head of Fraud at Aviva, said the most common type of fraud is motor injury fraud, which made up 54% of fraudulent claims caught by the company. Over 50% these are from organised so-called "cash for crash" claims.

This ties in with figures from the Insurance Fraud Bureau, which estimates that one in seven personal injury claims are linked to suspected "cash for crash" claims.

Gardiner blamed a combination of factors for the increase - including the economic climate and a lack of effective deterrents. He added that another problem was that people still see insurance fraud as a victimless crime

This is far from the case. Organised fraud is often linked to wider gang-related crime – and puts motorists at risk, diverts emergency service resources away from real need, and has a significant impact on premiums: the ABI estimates fraud adds £50 to the cost of a typical insurance premium.

Blind eye

Yet we still have very mixed feeling towards insurance fraud. Aviva research found that 9 in 10 people believe it is unacceptable, and almost two in three want insurance companies to do more to tackle fraud.

Despite this, many people turn a blind eye to fraud. Two-thirds of people would not report it to the police if someone they knew committed insurance fraud – a 53% increase since 2008.

Aviva's research also found that 23% of people knew someone who had exaggerated a genuine claim and 17% knew someone who had faked a whiplash injury to obtain compensation. The number of people surveyed who said they would consider exaggerating a claim increased by 35% to more than one in eight, compared to five years ago.

Risks

However, for anyone considering doing anything underhand with their insurance, the experts warn that the penalties are severe. The insurance companies have stepped up their efforts to detect fraud, and if you have been found to have made a bogus claim at the very least your insurance will be nullified. They may refuse to cover you in the future too - and because insurance companies share data, this could make it hard for you to get cover from any insurer at all.

In more serious cases, the police will prosecute. Aviva's largest successful fraud prosecution concerned organised and bogus whiplash claims, including over 200 claims with a potential value of over £5 million, where sentences of 4-7 years were handed down.