Organised crime to blame for rising insurance fraud

23 April 2014

The most prevalent type of insurance fraud in the UK is now to do with claims for injuries caused by 'cash for crash' incidents, meaning organised crime is on the rise, new research suggests.

Motor injury fraud now accounts for 54% of Aviva's total detected claims fraud costs and more than half stem from organised 'cash for crash' claims.

The insurer's fraud detection team is currently investigating 5,500 suspicious injury claims linked to known fraud rings – an increase of 20% since 2012.

The Insurance Fraud Bureau (IFB) estimates that one in seven of all personal injury claims are linked to suspected cash for crash claims. It puts the cost to insurers at £392 million a year and the Association of British Insurers says fraud in general adds £50 to the cost of insurance premiums.

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Third party fraud

As well as organised fraud, Aviva said it is also witnessing a trend toward third party injury fraud - which it identified in one in nine third party injury claims in 2013.

While further research conducted by Aviva two-thirds of people want insurance companies to do more to tackle fraud, 66% said they would not report it to the police if someone they knew committed insurance fraud. That figure was up by 53% since 2008.

The research also found that 23% of people knew someone who had exaggerated a genuine claim and 17% knew someone who had faked a whiplash injury to get compensation.

And the number of who would consider exaggerating a claim has increased by 35% to more than one in eight over the past five years.

The insurers biggest successful fraud prosecution to date related to bogus whiplash claims. More than 200 claims with a potential value of more than £5 million were detected and sentences of between four and seven years were handed down to the perpetrators.

Tom Gardiner, head of fraud at Aviva, said: "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 £2.65 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."

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