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A UK insurer reports a sharp increase in fraud. Zurich points to cost of living pressures for contributing to a rise in bogus claims.
Between January and 31 May, the insurance company saw fraudulent property claims rise by 25pc compared to the same period in 2021. In the last five months, the firm prevented fraud amounting to £4.2m – up from £3.3m over the same period in 2021. High-value jewellery, mobile phones and TVs were among the most common items that fraudsters claimed to have been lost, stolen or damaged. The average value of a fraudulent home insurance claim was £8,800.
Last year, Zurich detected more than £8.4m worth of fraudulent property claims, significantly up on the £4.7m it stopped the year before. The number of claims rejected due to fraud leapt from 394 to 473 – an increase of 20pc.
Detective Chief Inspector Tom Hill, from the City of London Police’s Insurance Fraud Enforcement Department (IFED), said: “We understand that the rising cost of living has made the past few months particularly hard for many people across the country – but turning to crime is never the answer. Submitting a bogus insurance claim may seem like a victimless crime, but it in fact drives up the cost of premiums for everyone. As well as this, it could also land you with a criminal record. Exaggerating or fabricating a claim for a pricey watch or television may seem like a quick way to make money, but a conviction will have a lasting impact on your life.”
Scott Clayton, Head of Claims Fraud at Zurich, said: “Sadly, many more people are facing hardships as a result of the cost of living crisis, which is contributing to an increase in fraudulent claims. Since the start of the year, we’ve seen a significant rise in bogus property claims, as households and businesses come under increased financial strain. While exaggerating or faking a claim might seem like a chance worth taking, the consequences can be severe, with fraudsters facing criminal prosecution and potentially even a prison sentence. At the very least, offenders can expect to find it harder to obtain cover.
“Although fraud is on the up, we’re better prepared than ever to detect it. New technology is helping us to fight fraud more effectively and making it harder for scammers to evade detection, whether they are individual opportunists or organised criminal gangs. We’re there for our customers when they need us, and last year paid £2 billion in claims. But as well as paying valid claims, we remain vigilant against fraud.”
The insurer says that it’s increasingly employing technology as a weapon to detect fraud. The insurer has new NetReveal software that uses algorithms and data analytics to uncover fraudsters trying to hide their identity by providing false name or address details. Software also highlights those with a poor claims history, such as those who have made multiple claims.
Zurich says that it has other counter-fraud developments in the pipeline. Later this year, it plans to launch ‘real-time’ checks at the point a claims handler enters a claim onto its IT systems – meanwhile speeding the processing and payment of claims for customers.
About the Insurance Fraud Enforcement Department
IFED was set up in 2012; a bespoke unit within the City of London Police to combat insurance fraud. IFED is funded by the insurance industry via the Association of British Insurers (ABI) and has a national remit, investigating insurance fraud in England and Wales. IFED accepts crime referrals from insurers as well as from others, such as the Insurance Fraud Bureau (IFB).
The Bureau meanwhile has launched its Don’t Chance Fraud campaign to highlight why succumbing to the temptations of fraud and landing on the Insurance Fraud Register (IFR), managed by the Bureau, has consequences for all.
Ben Fletcher, Director at the Bureau, said: “As millions struggle because of the cost-of-living crisis, the sad reality is more people could be tempted to chance insurance fraud and face the serious consequences of having a record on the Insurance Fraud Register.
“There are no winners when it comes to fraud. If someone intentionally lies on an insurance application or claim, they’ll be put on the Insurance Fraud Register which can deny them access to essential insurance services for years to come. They could face criminal prosecution. Plus, the added costs from fraud unfairly make insurance more expensive for everyone else.
“I know it’s easier said than done, but if anyone is struggling to make ends meet then they must seek financial support and look at how they can best manage their finances. The insurance industry really wants to help its customers at this challenging time, so please reach out to the insurer if struggling with payments. Whatever the next steps may be, don’t let fraud be one of them… it only makes things worse.”
About the IFR
A national database of insurance fraudsters, the Insurance Fraud Register is accessed by 82pc of the UK’s general insurance market. When an insurance application or claim is proven to be fraudulent the insurer can register individuals, businesses and articles (such as emails and phone numbers) linked to the fraud on the IFR.
There are over 50,000 records on the IFR and around 19,000 entries are people. Amongst individuals, the unemployed or those earning a low-income are sadly more likely to have an IFR record. Notably, millennials (26-41 year olds as of 2022) make up half of all cases.
Top five reasons someone is added to the IFR, according to the Bureau:
Submitting fake no-claims-discount (NCD) documentation.
Fronting – which is when someone puts themselves down as a named driver for a vehicle for which they are actually the owner/main driver.
Exaggerating damage or injury on what would otherwise be a legitimate claim.
Claiming for lost items which are later proven to be in possession.
‘Crash for Cash’ scams (staged motor collisions).