More than GBP110m worth of fraudulent insurance claims were detected by UK insurance company Aviva during 2013, it revealed on Wednesday.
Aviva said its claims fraud detection data for 2013 shows that there was a 19% increase in insurance fraud, compared with 2012. The company reportedly discovers over 45 fraudulent claims each day, which are said to be worth more than a total of GBP300,000.
Insurance fraud varies from genuine claims to injuries that are exaggerated, or entirely fictitious claims and accidents. The fraud is often carried out by third parties, people who are not insured with Aviva but who are making a claim against an Aviva customer, for example injuries incurred as a result of an accident.
Motor injury fraud is said to be most common type of fraud in the UK and represents 54% of Aviva’s total detected claims fraud costs. Over half of these claims come from organised ‘cash for crash’ claims. One in seven personal injury claims are linked to suspected ‘cash for crash’ claims and the total annual cost to insurers for cash for crash is estimated at GBP392m annually, according to the Insurance Fraud Bureau (IFB). Aviva added that organised insurance fraudsters are often linked to wider gang-related criminal activities
Aviva has a team of 25 staff dedicated to detecting and prosecuting organised fraud, which is currently investigating 5,500 suspicious injury claims linked to known fraud rings, an increase of 20% since 2012. It has successfully prosecuted insurance fraudsters who made organised and bogus whiplash claims, who were given sentences of between 4 and 7 years. These organised frauds included more than 200 claims that had a potential value of over GBP5m. The company also shares information with other insurers, the IFB and the Insurance Fraud Enforcement Department (IFED) in order to bring about prosecutions.
Research conducted by Aviva shows that there is concern among consumers regarding the scale of insurance fraud, with 90% finding it unacceptable and 64% wanting insurance companies to take further measures to tackle fraud.
However, many people reportedly turn a blind eye to fraud. Aviva’s research showed that 66% of people would not report insurance fraud to the police if it was carried out by someone they knew. This was a 53% increase compared to a 2008 survey by Aviva. The impact of fraud appears to have been underestimated, as just 10% of consumers realise that everyone is affected by higher premiums, as well as more road accidents that are caused by fraudsters seeking injury compensation.
The research also revealed that 23% of people knew someone who had exaggerated a genuine claim, while 17% knew someone who had faked a whiplash injury in order to get compensation. More than one in eight people said they would consider exaggerating a claim, an increase of 35% when compared to Aviva’s survey 5 years ago.
Tom Gardiner, Head of Fraud at Aviva, commented:
“Our priority is to pay genuine claims quickly and fairly while offering a great service to our customers. Last year in the UK, for example, Aviva settled over 910,000 claims worth GBP2.65 billion. We identified fraud on less than 1.9% of claims we received.
“However, a combination of factors including the economic climate, social attitudes toward insurance fraud as a ‘victimless crime’, and a lack of effective deterrents are increasing the frequency of insurance fraud. The good news is that we are constantly improving our ability to prevent and detect fraud, helping to keep premiums down for innocent policyholders. The ABI estimates fraud adds GBP50 to the cost of insurance premiums.”