Fall in insurance fraud

16 September 2022 | David Young

Fall in insurance fraud is good news for honest customers, but no room to go easy on the cheats says the ABI

Fall in insurance fraud

The sustained crackdown on insurance fraud is paying dividends, with a fall in both the number and cost of dishonest claims uncovered last year according to data out today from the Association of British Insurers (ABI). However, the average detected fraud was at a record £12,283, due to the slower fall in their total value.

The figures highlight that in 2021, compared to 2020:

  • The number of fraudulent claims detected at 89,000 fell by 5% to their lowest since 2007. Their total value at £1.1 billion dropped 2% to the lowest level since 2012.
  • Motor insurance claim frauds continued to be the most common, albeit that last year saw a fall in their total volume and value. There were 49,000 frauds detected, down 7%, although their value, at £577 million, fell by only 1%. The number of organised motor frauds uncovered at 10,617 rose by 8%. This rise in part reflected initiatives by the Insurance Fraud Bureau to tackle crash for cash staged motor scams.
  • While the number of property insurance frauds dropped to 18,000 compared to 24,000 in 2020, their value rose to £124million, up 9%. This was driven by a rise in the value of commercial frauds uncovered.
  • The number of fraudulent liability insurance claims uncovered at 12,978 dropped by 10%; their value, at £378,000, fell by 8%.

Mark Allen, the ABI's chief fraud and financial crime officer, said:

"Insurers continue to work hard to pay legitimate claims as soon as possible. With many households battling the cost-of-living crisis, more than ever honest customers rightly expect there to be no let-up in the industry's clamp down on insurance fraud, the costs of which end up being absorbed in the premiums paid by all customers. The fall in reported insurance fraud reflects the industry's sustained counter fraud investment and collaborative approach, but no one can lower their guard against the cheats.

"Fraudsters thrive in hard times, preying on the vulnerable. So, we urge people to be vigilant to the threat of financial scams, including those carried out online. The golden rule is if a deal looks too good to be true, then it probably is. Anyone with suspicions should check the credentials of who they are dealing with to ensure they are genuine. If you suspect a fraudulent insurance claim you should alert the free, confidential Insurance Cheatline, run by The Insurance Fraud Bureau."

Ben Fletcher, director at the Insurance Fraud Bureau (IFB), said:

"The insurance industry is working harder than ever to stop fraudsters in their tracks and the fall in scams seen in 2021 is a great reflection of these efforts. While we welcome this positive progress, fraud levels are still far too high and countless innocent people sadly continue to be targeted by devastating insurance scams.

"We must do more to fight fraud. Every day we're working in partnership with insurers and the police to investigate suspicious activity and bring fraudsters to justice, but we also need the public's help. If anyone has evidence of insurance fraud, we encourage them to report it to our free confidential Cheatline at insurancefraudbureau.org or 0800 422 0421."

Detective inspector Andrew Thompson, from the City of London Police's Insurance Fraud Enforcement Department (IFED), said:

"Whilst it is positive to see that detected insurance fraud rates fell in 2021, both IFED and the insurance industry cannot afford to take its foot off the pedal when it comes to disrupting and uncovering these crimes. We have a bumpy road ahead of us, with a predicted rise in fraud due to the cost-of-living crisis driving people to find other means of financial gain. The need for solid partner-working between law enforcement and the industry is now more important than ever to prevent an epidemic of insurance fraud."