Fraudulent insurance claims rise to over £110 million in 2013 – Aviva

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.”

Aviva mandates Barclays to find buyers for Turkish insurance arm

UK insurer Aviva Plc (LON:AV) has picked Barclays Plc (LON:BARC) to assist it in selling its Turkish non-life insurance unit Aviva Sigorta AS, according to media reports today.

Aviva, which had announced a strategic review of its Turkish business in November 2012, refused to make a comment when approached by news agency Reuters..

According to one of the people, the sale process would be hard as the target has no banking distribution channel. Yet, Aviva Sigorta could attract buyers who are seeking small-medium assets.

Aviva Sigorta has a market value of TRY735m (USD416m/EUR311.4m), based on its stock price of TRY4.90 today.

Fund manager Ashmore acquires Aviva’s stake in Chinese joint venture

British fund manager Ashmore Investment Management Ltd will acquire its competitor Aviva Investors’ 49% stake in a proposed Chinese joint venture with China Central Securities.

The UK fund manager has been seeking to grow its presence in China for some time and through this JV will get the chance to build a local fund management business, a spokesperson for Ashmore told AsianInvestor today.

He noted that the new entity will be based in Shanghai and operate under the name Ashmore-CCSC Fund Management Company, but did not provide any financial details regarding the transaction. The spokesman stressed that Chinese regulations forbid the creation of a wholly-owned foreign assets management firm. Ashmore has had an office in Beijing since 2010.

A spokesman for Aviva Investors in Singapore did not confirm the move to AsianInvestor.

Shanghai-based consultancy Z-Ben Advisors said it considers Ashmore’s planned partnership with China Central Securities to be risky due to insufficient funding. According to it, the parties will have a combined investment of CNY200m (USD31.6m/EUR24.5m), which is CNY100m less than what the advisor recommends as a minimum.

Z-Ben noted that since Ashmore targets the maximum foreign shareholding limit of 49% it would like to be actively involved in the venture.

UK insurance group Aviva puts its US business on the block

UK insurance major Aviva Plc (LON:AV) is gearing for a sale of its US business after receiving several unsolicited approaches from trade buyers and private equity groups, the Sunday Telegraph reported without specifying its sources.

According to the UK newspaper, Aviva’s finance chief Pat Regan has spent quite a while in Des Moines, Iowa – the city where Aviva USA’s headquarters are located – to make preparations for the sale and launch the process. An investment bank is yet to be formally appointed but Aviva’s executives are believed to have settled on Goldman Sachs Group Inc (NYSE:GS) as manager of the sale.

Aviva agreed to pay GBP1.8bn (USD2.8bn/EUR2.3bn) in mid-2006 for what was then called AmerUs, combining it with its existing US business to create Aviva USA. The sale of the business is expected to leave the UK company with a loss of GBP800m on its initial investment since the division is now estimated to be worth GBP1bn, the Sunday Telegraph said.

Following shareholder pressure, Andrew Moss stepped down as chief executive of Aviva in May, leaving newly appointed executive chairman John McFarlane to fill the gap on a temporary basis.

Earlier in July, McFarlane presented his plan for a strategic overhaul of the company, saying that 16 out of 58 businesses have been designated non-core and will either be sold or shut down. However, Aviva could not be drawn into commenting at the time on whether its US division was one of those businesses.

The company has already pulled out of Hungary, Romania, the Czech Republic and Australia and is set to exit Taiwan as well, selling its 49% stake in its local joint venture.

The Sunday Telegraph was unable to extract a comment from an Aviva spokesman with regard to the US divestment.

UK insurance firm Aviva sells more Delta Lloyd shares due to strong demand

British insurer Aviva Plc (LON:AV), a 41.3%-owner of Delta Lloyd NV (AMS:DL), will sell 37m shares of the Dutch insurance firm, more than initially planned, due to favourable demand from investors, Delta Lloyd said.

Aviva, which originally wanted to sell 25m Delta Lloyd shares, representing 14% of its ordinary share capital and 14% of the votes, to institutional investors, raised that volume to 21% of the Dutch group’s share capital and 20% of its voting rights.

The Delta Lloyd stock will be sold through an accelerated book-building with the price to be decided by that process, the Dutch insurer said.

Aviva, which after this disposal will be left with 34m Delta Lloyd ordinary shares accounting for nearly 20% of the target’s capital and 19% of its votes, has pledged to keep its remaining interested in the Dutch insurance group for 180 days following the completion of this deal.

Delta Lloyd, providing life insurance and general insurance, as well as asset management and banking products and services, is focused on markets in the Netherlands and Belgium. In the Netherlands it is present under the brand names Delta Lloyd, OHRA and ABN AMRO Insurance, while in Belgium it operates as Delta Lloyd. The group has 5,401 permanent employees.

British Aviva has more than 43m customers for its long-term insurance and savings, general and health insurance and fund management products and services. Its divisions cover markets in the UK, Europe, North America and Asia Pacific.