By: 28 August 2019
ABI reveals 2018 fraud cases and figures

A preacher, a rock guitarist pensioner and an award-winning hotelier were among the insurance fraudsters exposed last year, the Association of British Insurers (ABI) has revealed.

The frauds are among the ABI’s annual figures for 2018 and paint a picture of rising fraudulent insurance applications but falling sham claims. 

In 2018, a retired fridge engineer dropped his claim for hearing loss caused by his work, when it emerged that he was a frontman in a rock ’n’ roll band, while a preacher and self-styled bishop was jailed for 10 months when found guilty of staging a motor crash.

An award-winning hotelier was caught out claiming £34,000 in disability income from his insurer, saying that his depression and anxiety meant he could not work, when he was in fact running a hotel.  He received a 14-month suspended prison sentence.

Last year, 469,000 insurance frauds were detected by insurers, with fraudulent claims accounting for 98,000 and dishonest insurance applications making up the majority at 371,000.

According to the ABI, the number of fraudulent claims detected fell 6% on 2017, while the number of dishonest applications for cover rose by 5%.

The value of the 98,000 dishonest claims detected, at £1.2 billion, fell marginally by under 1% on the previous year.

Michael Kelly, head of underwriting and fraud at AXA Insurance, welcomed the figures on insurance application fraud, saying: “The latest figures on application fraud are a sign that insurers have improved their controls and are also more willing to report their findings. That is encouraging but we can go further, as an industry, to tackle this issue.”

“We must make better use of the data available to us, especially large datasets. The IFB can make these available directly to insurers, enabling them to use that information in a way that is bespoke to the fraud problem.”

Several detected fraudulent claims were of significant value. The ringleader of an organised gang that staged motor crashes to steal nearly £1.2 million from insurers was jailed for six years.

Another detected fraud saw a criminal gang make fake claims of nearly £1 million for damage and lost earnings from restaurants it said had been flooded by burst water pipes. Five men were jailed for a total of 14 years.

ABI fraud and financial crime manager Mark Allen hailed the steps insurers have taken to tackle “the scourge of honest insurance customers”.

He said: “Insurance fraud is the scourge of honest insurance customers who make genuine claims. Insurance cheats can be ingenious, and are constantly looking for new scams to exploit, which is why the industry makes no apology for spending around £250 million a year on measures to tackle this crime. Spearheaded by the Insurance Fraud Bureau (IFB) and the Insurance Fraud Enforcement Department (IFED), there will be no let-up in the industry’s determination to root out fraudsters and press for the stiffest possible penalties for these cheats.”

Ben Fletcher, director of the IFB, continued: “Today’s announcement by the ABI shows that organised motor fraud is still a big problem and one that the insurance industry, working together with the police, will continue to tackle. Fraudsters are constantly reinventing themselves and application fraud and liability are areas of growth that we now need to focus on.”

“It’s also important that members of the public continue to report suspected fraudsters anonymously through our Cheatline service, which is a valuable tool for disrupting fraudsters.”

Detective chief inspector Andrew Fyfe, head of the City of London Police’s IFED, said: “The actions of insurance fraudsters increases premiums for honest customers and costs the insurance industry millions of pounds a year. Not only that, certain tactics used by these fraudsters, such as crash for cash claims, can put the lives of innocent members of the public at risk. For this reason, IFED continues to come down hard on insurance fraudsters; achieving convictions and other sanctions against these criminals on a weekly basis.”