Rise in fraudulent insurance claims

A major insurer has reported a 19% year-on-year increase in fraudulent claims, which it says is being driven by organised gangs and a "lack of effective deterrents".

An Aviva spokesman said fraud adds around £50 to the cost of everyone's insurance premium
An Aviva spokesman said fraud adds around £50 to the cost of everyone's insurance premium

Aviva said it uncovered more than £110 million-worth of motor insurance fraud last year, marking a 19% increase compared with 2012, with the bulk of bogus claims being due to motor insurance fraud.

Motor injury fraud makes up over half (54%) of Aviva's total detected claims fraud costs and the insurer said that much of this is down to organised gangs making "crash for cash claims", where criminals deliberately stage an accident, sometimes by slamming on their brakes so that an unsuspecting motorist drives into the back of them.

Aviva said it is currently investigating 5,500 suspicious injury claims linked to "known" fraud rings, representing an increase of 20% since 2012.

Tom Gardiner, head of fraud at Aviva, said according to industry estimates, fraud adds around £50 to the cost of everyone's insurance premium.

He said: "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."

Mr Gardiner continued: "We are witnessing a trend toward third party, injury and organised fraud. For example, in 2013, we identified fraud in one in nine third party injury claims."

Aviva highlighted what it felt was a "disappointing outcome" from one recent case it had been involved in, which centred on a bogus minibus accident in Newcastle in 2009. The minibus had been supposedly carrying a group of people to a stag event, who alleged they sustained whiplash injuries as a result of the minibus being in a collision with another car.

But Aviva said that instead of the reported collision, the minibus had been deliberately damaged elsewhere and then taken to the scene of the incident, where debris was scattered and the accident "staged". Aviva said its investigations linked the driver and passenger of the other vehicle to the occupants of the minibus through social media websites.

As well as presenting personal injury claims worth more than a total of £100,000, six ambulances also attended the scene and the party were treated at the local hospital. The insurer said 13 people later received suspended sentences and community service and "modest" fines of several hundred pounds as a result of the incident.

Aviva said that last year, it settled more than 910,000 claims worth £2.65 billion and fraud was identified on less than 1.9% of claims it received.

Its own research among over 2,000 consumers found there is "considerable concern" about the scale of insurance fraud, and 64% of people want insurers to do more to tackle it.

Despite this, increasing numbers of people would turn a "blind eye" to fraud . Two thirds (66%) of people surveyed said they would not tell the police if someone they knew had committed insurance fraud, marking a 53% increase compared to a similar survey in 2008.

Aviva said the findings also suggest that people underestimate the impact of fraud, as just one in 10 people think they are affected by it, whereas in reality, everyone feels the impact through higher premiums.

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 obtain compensation. Overall, 92% of people surveyed believe dishonesty is a problem in today's society, up from 75% in 2008.