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Aviva, the UK insurer, reports a 9.5 per cent increase in the number of fraudulent claims it declined in 2016. The firm says this was due to increases in fraud detection across motor bodily injury, household and liability claims. The insurance company detected more than £85m of insurance fraud last year, or £232,000 worth of bogus claims a day.
Bodily injury frauds such as exaggerated or bogus whiplash claims continue to account for most of the fraud Aviva identifies, by volume and value of claims. Bodily injury fraud accounts for 59pc of that total fraud the firm detects. The company says that it’s investigating more than 16,000 suspicious bodily injury claims and declined one in ten whiplash claims for proven or suspected fraud in 2016.
Organised fraud accounts for much of the new injury fraud. In 2016, Aviva declined claims worth over £25m linked to fraud rings. The problem is not going away, either, as the insurer says that it’s investigating more than 3000 suspect whiplash claims linked to organised fraud. In 2016, Aviva had 154 fraudulent whiplash claims ‘struck out’ due to findings of fundamental dishonesty – more than any other insurer. When the court finds a claimant to be ‘fundamentally dishonest’, it not only allows the judge to throw out the entirety of a claim, but it means the claimant has to pay all the costs of the action. Claimants caught lying or exaggerating could wind up paying tens of thousands of pounds in legal costs. Aviva also secured 29 successful criminal prosecutions for fraud last year, resulting in 29 years’ prison sentences.
Fraudulent household claims grew by 30 per cent over 2015, while the value of these claims grew by more than 50pc, as fraudsters submitted bogus claims for more expensive household items. A growing trend in household claims are “serial claimants” – fraudsters who make multiple claims, often for the same item, by purchasing dozens of home insurance policies using aliases. Policies are taken out with the sole aim of making fraudulent claims, the firm believes. Although these scams used to be rare, the insurer now detects more than six scams every month.
The most common fraudulent household claims were for accidental damage, theft and accidental loss. The average value of a fraudulent household claim was £1,315, with values ranging from as little as £25 up to £83,560. As the firm says, the large number of relatively low value claims indicates that fraudsters believe insurers won’t scrutinise low-value fraud. The five most common bogus claims were:
1. Accidental damage to television
2. Accidental damage to mobile phones
3. Accidental damage to laptop/tablet
4. Accidental loss of jewellery – and
5. Accident loss of mobile phone
Liability claims – made against an employers’ liability or public liability policy – also feature; and have the second highest frequency of fraud after whiplash. Aviva challenged and declined 6pc of claims for fraud in 2016 and has over 1000 suspect liability claims under investigation. Hence, the industry-funded Insurance Fraud Bureau (IFB) is extending its remit from motor insurance to include liability and property fraud.
Last year, the insurance company says that it avoided more than 13,000 motor policies due to fraud, up on 2015. Fraudsters typically want to access cheap cover that they’re not entitled, to or to buy policies for them to go on to make fraudulent claims. Often, fraudsters will deliberately misrepresent their address, claims histories or drivers. ‘Crash-for-cash’ gangs will also fraudulently buy cheap policies to then make numerous bogus claims. In one instance, a gang from Birmingham took out hundreds of bogus policies at rural addresses and went on to make 190 bogus claims worth over £3m.
Tom Gardiner, Head of Fraud at Aviva, said: “As our figures show, the fight against fraud continues relentlessly. But there is some good news: our investment in detecting fraud across all lines of business is seeing some very good results: we are prosecuting more cases, and by moving the fight against fraud to the front door we are stopping fraudsters from accessing our products in the first place. We vigorously defend our customers against fraudulent claims, even where it is not economic to do so, and will prosecute those people making fraudulent claims wherever possible. Looking at our bodily injury fraud data, it is clear that there continues to be an urgent need for fundamental reform of how minor personal injuries are compensated. The growing number of these scams is putting pressure on premiums. And, in the case of crash for cash, innocent motorists are put at risk and scarce public resources are diverted away from real need, such as emergency services, GP and A&E time. Whatever the outcome of the General Election, we hope that the incoming government will continue to prioritise these important reforms for the benefit of customers.”
Meanwhile four Birmingham men in May were sent to jail or given suspended terms, marking the 500th case for the IFB. The bureau provided support to Warwickshire Police by reviewing seized documentation that the gang used to submit multiple claims to insurance companies for fake injuries, vehicle damage and solicitor costs.
Ben Fletcher, Director of the IFB, said: “This investigation between Warwickshire Police and IFB highlights to would-be fraudsters that the risks of being caught and prosecuted are very real and they face the prospect of heavy fines, a criminal record and imprisonment, with potentially restricted access to financial services for the rest of their lives. Fraudsters are fuelled by greed and have little regard for the impact they have on others. Not only are they putting road users at risk of injury but crash for cash has significant costs associated to it. We estimate it costs the industry £336m per year, and it is premium-paying motorists who ultimately foot the bill.
“Hitting our 500th conviction significantly demonstrates the importance of having the continued commitment from the insurance industry and police in tackling fraud. Working together we are tightening the net on fraudsters which ultimately sends a strong message to the public that fraud is not acceptable.”