New statistics from the Association of British Insurers (ABI) and the Insurance Fraud Bureau (IFB) have highlighted a rise in cases of liability and application fraud, with the average value of detected insurance fraud reportedly in excess of £12,000 and the volume of application fraud cases under investigation by the IFB seeing an increase of more than 65 per cent since 2017
Though motor insurance fraud remains the largest area of fraud overall, instances of application fraud continue to grow; the ABI noted that detected liability fraud cases have increased from 1.6 million in 2017 to 1.8 million in 2018, now making it the second largest area of fraud. In response, the IFB is increasing its focus on organised claims farming, especially in areas such as fraudulent cavity wall insulation claims.
Furthermore, upon uncovering that opportunistic fraud continues to represent the majority of fraudulent claims (89 per cent of the value of fraudulent insurance claims in 2018 were opportunistic in nature), the IFB has begun working with behavioural science specialists to develop key recommendations to help insurers influence common patterns of behaviour that often lead to a fraudulent claim.
The IFB cited that, in May 2018, two fraudsters were jailed after a successful IFB and City of London police operation uncovered one of the largest ghost broking operations ever recorded – the fraudsters had ties to an Albanian drug gang who were using legitimate policies that were obtained using stolen identities to avoid detection by the police. This case highlighted that some forms of application fraud are often linked to wider organised crime.
“Although today’s announcement suggests the current strategy to tackle organised fraud is working, the broader picture is more complex,” said Ben Fletcher, Director at the IFB. “The nature of organised fraud is changing, as criminal groups seek to exploit opportunities in areas such as application, property and liability fraud where collaboration and enforcement are less developed.”
For now, Fletcher reasons that ‘improved reporting and easy access to shared intelligence’ will help IFB members ‘identify and close down sophisticated criminal groups’. However, in the long term, it’s up to the insurance industry as a whole to work collaboratively in employing such tactics and fraud-fighting technologies.