Aviva detected £110m of insurance fraud, up 19% over 2012

The UK’s largest insurer, detected over £110m worth of insurance fraud in 2013 – a 19% increase compared with 2012. Aviva detects over 45 fraudulent claims per day worth more than a total of £300,000.

Aviva’s figures show that insurance fraud is a diverse crime and can range from exaggerating genuine claims or injuries to entirely fictitious claims and accidents. Increasingly, insurance fraud is carried out by third parties – people who are not insured with Aviva but who are making a claim against an Aviva customer (e.g. for spurious injuries as a result of an accident) – and also by organised gangs.

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 £2.65bn. 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. The ABI estimates fraud adds £50 to the cost of insurance premiums.”

Who are the fraudsters?

The most common type of fraud in the UK, according to Aviva, is motor injury fraud, which represents 54% of Aviva’s total detected claims fraud costs. Over 50% these are from organised so-called cash for crash claims.

Organised fraud is often linked to wider gang-related crime – and puts innocent motorists at risk, diverts scarce emergency service resources away from real need, and has a significant impact on premiums and the public purse.

Tom 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 has a market leading capability focused on organised fraud detection and currently is 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 personal injury claims are linked to suspected cash for crash claims; the total annual cost to insurers for cash for crash is estimated at £392m every year (IFB).

Detection

To help combat organised insurance fraud, Aviva has a team of 25 staff dedicated to detecting and prosecuting organised fraud – the largest resource of any UK insurer. Aviva also works with other insurers, the IFB and the Insurance Fraud Enforcement Department (IFED) to share information and prosecute cases.

Aviva’s largest successful fraud prosecution concerned organised and bogus whiplash claims, including over 200 claims with a potential value of over £5m, where sentences of four to seven years were handed down.

Consumer concern

There is considerable concern among consumers about the scale of insurance fraud. Research conducted by Aviva found nine in 10 people believe it is unacceptable, and almost two in three (64%) want insurance companies to do more to tackle fraud.

Despite this, many people turn a blind eye to fraud. Two-thirds (66%) of people would not report it to the police if someone they knew committed insurance fraud – a 53% increase compared to a 2008 survey by Aviva. Consumers also appear to underestimate the impact of fraud as just one in 10 think they will be affected by it, whereas in reality, everyone is affected by it in the form of higher premiums, and more road accidents are caused by fraudsters seeking injury compensation.

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. The number of people surveyed who said they would consider exaggerating a claim increased by 35% to more than one in eight, compared to five years ago. Perhaps it is no surprise, then, that 92% of people believe dishonesty is a problem in today’s society, up from 75% in 2008.