Fraudulent insurance claims tumbled by nearly a fifth to the lowest level since 2005 last year but the value of the average scam surged to a record £15,000 as fraudsters are increasingly “aiming big”, according to a report.
The Association of British Insurers (ABI) revealed that the number of fraudulent claims detected dropped by 19% to 72,600 last year – the lowest since 2005 – in a sign that the crackdown on insurance cheats may be paying off.
It said the industry’s warnings over the “grave consequences” of committing fraud may be deterring some people, but said scammers are becoming more ambitious.
There can be absolutely no let-up in pursuing insurance fraudsters— Mark Allen, ABI
The latest figures show the average value of an insurance fraud soared by 20% to an all-time high of £15,000 last year.
This partly reflected the rise in the value of property frauds – up 8% to £134 million – as well as higher inflation.
The ABI said there must be “no let-up” in the drive to stamp out claims fraud, with fraud now the most reported crime in England and Wales.
Mark Allen, the ABI’s assistant director and head of fraud and financial crime, said: “While it is good to see the industry’s collaborative efforts delivered results in 2022, there can be no room for complacency.
“With many households and businesses continuing to face rising costs, now more than ever, honest customers expect insurers to weed out the cheats and focus on paying genuine claims as quickly as possible.
“As financial hardship increases, previously honest customers could be tempted to ‘act in the moment’ to exaggerate claims.
“These latest figures highlight that some fraudsters are aiming big, with some large frauds uncovered.
“This shows why there can be absolutely no let-up in pursuing insurance fraudsters.”
In one example of a recent fraud case, a man was jailed for 16 months for making 15 bogus travel insurance claims worth £75,000, using the identities of people he knew.
In another, an employee at a veterinary practice was caught claiming more than £37,000 in fraudulent pet insurance claims.
The woman took out pet insurance policies with six insurers and made a total of 18 fraudulent claims against them over four years.
In most cases, she made up the names and breeds of the animals for which she had taken out the cover.
The ABI said there was an 18% fall in the number of opportunistic fraud cases, to 63,000 in 2022, but that the value of these claims rose 2%, with a total cost to the industry of £1.1 billion.
It said the overall fall was also driven by a 20% drop in the number of personal injury claims, which it said was largely as a result of the Official Injury Claims Portal reducing the overall number of small personal injury claims being made.
Motor insurance continues to make up the largest number of fraud cases, at 42,500 – 59% of all insurance claims fraud.
Detective Chief Inspector Tom Hill, from the City of London Police’s Insurance Fraud Enforcement Department (IFED), said: “The increase in the average value of fraud shows that both IFED and the insurance industry cannot afford to take our foot off the pedal when it comes to uncovering and disrupting fraudsters.
“Insurance fraud is never simply taking money from a company that can afford it.
“Many victims of insurance fraud are members of the public, from people who have their identities stolen to help facilitate fraud, to people who have unknowingly bought fake motor insurance from ghost brokers.”
Mr Allen added it was “important that consumers remain vigilant to potential scams”.
“The golden rule is never act in haste – if a deal appears too good to be true, then it probably is.”
