Insurance Fraud in the UK hits £1bn Yearly Cost
The value of fraudulent insurance claims has been consistently rising and has finally topped a massive £1 billion in 2013. These costs are being felt by the consumers and the industry has said there will be no mercy in the fight against fraudulent insurance claims. The number of phony claims mounted up to 124,292 in 2012 which works out at a huge 2,390 a week. These claims are costing the insurance companies a total of £1.1 billion according to the Association of British Insurers (ABI). It is estimated that these fraudulent claims are adding between £50 and £90 a year to customer’s insurance premiums.
Nick Starling, ABI’s director of general insurance, said: “There will be no let-up in the industry’s zero-tolerance approach to insurance. Honest customers rightly expect nothing less.” The ABI added: “The number of frauds detected between 2007 and 2012 rose by a third, with the total value doubling this time.” The majority of fake insurance claims in 2012 were on home insurance. The total added up to 51,000 claims costing roughly £95.5 million, according to the trade body. Fake motor insurance claims had a lower volume but a higher cost, reaching an amount of £614 million over 42,700 claims. Starling said: “Never has it been harder to get away with insurance fraud, never have the penalties – such as getting a criminal record and being in able to get future insurance and other financial products – been tougher.”
One example of a fraudulent insurance claim the ABI uncovered is a man who faced 8 months behind bars after he was caught playing rugby after he had tried to claim almost £1 million for a workplace injury. A woman, daughter and her husband are facing a prison sentence after claiming that they were left severely disabled after a car crash when it was all just a big lie. The ABI said: “The City of London Insurance Fraud Enforcement Department, which tackles insurance fraud across England and Wales, has made hundreds of arrests and is securing a growing number of convictions.” Starling added: “The impact of the Insurance Fraud Enforcement Department, the development of the Insurance Fraud Register and the work of insurers own fraud investigation teams underline our determination to deter potential cheats and come down hard on anyone who thinks making a fraudulent claim is 'easy money'."
James Savery, 26 July 2013