False insurance claims on the rise in UK

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New reports from Cifas, an independent, not-for-profit membership organisation that works to prevent fraud and financial crime, reveal that there has been a 27-per-cent increase in false insurance claims across the UK in the past year.

Members of Cifas identified the biggest causes of false claims as household insurance fraud and motor insurance fraud – making up 52 per cent and 45 per cent of false claims respectively.

Overall, insurers saw a decrease in fronting – when a driver claims they are the main user of a vehicle that is actually driven by a young driver or other high-risk motorist in order to receive lower premiums – though 300 cases occurred in 2018 and there was an 18-per-cent increase in fronting by people aged 21-30 years.

Chief Executive Officer of Cifas Mike Haley commented: “As the rise of false claims in household and motor insurance shows, many people are seemingly unaware of the risks they’re running and the consequences it can have by committing everyday fraud. While the overall downturn in fronting insurance policies is a positive sign, the fact that young people are increasingly more likely to commit that type of fraud highlights the need for continuing education. More needs to be done to raise awareness about the harm of fraud and financial crime.”

In response to these alarming statistics, Cifas has launched its ‘Face of Fraud’ campaign, which sheds light on the claims temptations that can entice consumers to commit fraud, and urges people to seriously consider the consequences of making false claims or fronting insurance policies.

"False insurance claim fraud and fronting insurance policies are often seen as an easy way to make a bit of money without hurting anyone. Yet the idea that fraud is a victimless crime is completely false,” Haley stated.

Indeed, the consequences can be very serious – including non-payment of claims; cancellation of the insurance policy; individuals having to pay costs that arise from an accident; a record with Cifas and the Insurance Fraud Register, making it more difficult to obtain insurance and other financial services. Not to mention that the case could also be reported to the police for investigation, potentially leading to a criminal conviction and a prison sentence.

Haley also adds that ‘committing fraud hurts everyone’: “Your neighbours, your friends, people in the area, and the UK as a whole. Insurers have to spend longer reviewing insurance claims and policy requests, premiums go up, and everyone loses out.”