Aviva reports 2021 insurance fraud increase

Aviva has revealed that the proportion of insurance claims it received in 2021 that were found to be fraudulent grew by 13%.

The insurer said that it uncovered more than 11,000 instances of claims fraud last year, potentially costing more than £122 million. Aviva is investigating a further 16,700 claims for suspected fraud.

Increases in the proportion of fraudulent claims Aviva detected were seen across the insurer’s motor, home and liability books.

Motor continues to account for 60% of all claims fraud detected, despite the introduction of the whiplash reforms in May 2021.

Aviva believes the changes, which reduced compensation awards for minor whiplash injuries, will reduce motor injury fraud over time as disproportionate compensation awards and fees are brought in line.

Until then, Aviva will be concerned that the proportion of fraud detected on motor injury claims last year grew by 10.7%, as what the insurer deems to be ‘organised fraudsters’ sought to take advantage of the opportunity prior to the introduction of the reforms and traffic volumes returned following the easing of COVID-19 restrictions.

There are early signs that these organised fraudsters are focusing their efforts on fraud connected with the repair aspects of a motor claim, including credit hire and repair, which grew by 13% in 2021.

Aviva recorded particular growth in this area after the reforms came into effect, signalling a shift in organised fraudsters’ focus.

While only accounting for 13% of the fraud Aviva detected, the number of dodgy home insurance claims increased by 45%, the highest in seven years.

Aviva flagged last year that home insurance fraud detection would be a priority for the insurer in 2022, with an expected increase and the cost of living creating additional pressures.

The most common types of detected home fraud were bogus claims for accidental damage, accidental loss and theft. The average value for a fraudulent household insurance claim was £3,645.

The rate of liability claims declined for suspected fraud committed against a business employer’s liability or public liability insurance policy also grew by 12% in 2021.

Aviva believes that some of the organised fraudsters involved in whiplash fraud have moved, or are moving, to pursue liability fraud. One in four (25%) bogus liability claims rejected by the insurer are for slips, trips and falls.

Waseem Malik, chief claims officer at Aviva UK General Insurance, said: “Fraud is typically committed for reasons of need or greed, and we believe the increase in claims fraud last year is linked to reduced incomes during COVID lockdowns.”

“As more households and businesses come under increased financial stress due to the cost of living crisis, we expect to see more claims fraud, especially on home, small business and liability insurance policies. Insurance fraud is a crime, and we are continuing to invest in strengthening our fraud defences to protect genuine customers from the impact of fraud and to keep premiums low.”

He added: “We will also be keeping a watchful eye on motor injury fraud this year, to see if it declines as the whiplash reforms bed in. Although it’s early days, we are starting to see some signs that organised fraudsters involved in motor injury fraud are moving into the repair side of motor claims, as well as liability frauds such as slips and trips.”

Mark Dugdale