Cracking Down on Cheats
Whatever the reason, fraud costs the insurance industry £2.1 billion a year, according to a report by the National Fraud Authority (NFA), pushing up the annual cost of insurance by an extra £44 per household.
Home insurance is the number one target for insurance fraudsters with 170 cheating householders caught out each day, says the Association of British Insurers (ABI).
The National Fraud Authority (NFA) estimate that c£350 million a year is lost in organised or staged motor vehicle accidents; the ABI estimates that 108 bogus motor insurance claims worth c£1 million are exposed each day.
The reasons people say they commit opportunistic fraud are mainly to do with their perceived sense of 'fairness': covering the excess and recovering premiums paid, are typical examples.
Fighting Back
The Insurance Fraud Bureau (IFB) was set up in 2006 as a solution to combat organised fraud. Its work has resulted in 485 arrests, 105 prosecutions and 78 years of total imprisonment. The IFBs Cheatline* gets around 200 tip-offs every month (over half of these are via the internet).
The IFB's work currently focuses on personal lines: motor, household claims and soon travel, and is shared using the Claims Underwriting Exchange (CUE), as is data relating to personal injury claims.
Aside from the IFB's activities insurers and brokers are becoming more sophisticated in recognising potentially fraudulent activity. For example, AXA's Automatic Fraud Screening Solution (AFSS) system uses available data on typical scenarios and predicts likely outcomes, in addition to examining claims up front. AXA is also now using social networking to obtain information.
The Insurance Industry is fighting back, to make it fairer for the honest majority of policyholders. Do you know anything that could help?
*IFB's Cheatline 0800 328 2550 or online www.insurancefraudbureau.org/report
This article was added on 08-07-2011
