Fraud is evolving. Here’s how we fight it.

The UK government is stepping up efforts to fight fraud with new laws and initiatives like the Joint Fraud Sector Charter. Ruth Needham, partner and head of fraud at Kennedys, looks at how fraud is changing and how we can all work together to stop these growing threats: 

The new UK government’s arrival seems to signal a renewed interest in tackling insurance fraud. Lord David Hanson has been given the task of tackling fraud generally, but there is a focus on insurance fraud. The creation of the Economic Crime and Corporate Transparency Act – which incorporates the “failure to prevent fraud” provision defined on 6 November 2024 and to become law on 1 September 2025 – demonstrates the government’s intention to take fraud seriously.    

This is further supported by government’s creation of the voluntary Joint Fraud Sector Charter with the objective of: 

“Working with industry, other government departments, regulators, and professional bodies to fully understand the threat from ‘professional enablers’ across different sectors in facilitating insurance fraud, and understand action taken when this behaviour is discovered. One of the actions will include the National Assessment Centre (NAC) undertaking a threat briefing to identify a plan of action based off key outcomes of the report.”   

The hope is that this organisation will gather data to prevent fraud and may ultimately seek to extend the principles of fundamental dishonesty. But is all of this necessary?  

Emerging trends in fraud

Fraud continues to rise by anything from 4% a year to 16% since last year, and in 2023 over £1 billion of fraud was identified by the ABI.  Therefore, this is still a significant issue for insurers.   

The greatest change in the fraud world is the increase in the number of professional enablers: organisations that allow or facilitate fraudulent claims, particularly in the commercial space. Personal motor lines have been aware, for an extended period, of the need to investigate claims and insurers have consequentially invested heavily in the technology that allows for the detection of this type of fraud. The industry has worked hard to devise systems that allow for the sharing of data, and it has been successful; fraud in motor personal lines has not been defeated but it has certainly reduced.  

This same focus now needs to be placed in relation to commercial claims. The rise in fraud within these sectors is more difficult to identify, as the data is not collected in the same way, and because of a greater use of brokers. This means that data is collected in a different way and isn’t always easily shared with insurers.   

How new AI technology is changing the game

Trends in fraud are constantly changing. Currently, fraudsters can AI to create fake documents, websites and videos, which means that they can also provide supporting documentation for a fraudulent claim much more easily. It is essential to assess the metadata that accompanies documents provided in support of fraudulent claims and use all available software to identify the deepfakes.   

The rise of fraudsters focusing on commercial vehicles – since they are likely to be insured, and the driver may not be interested in supporting their employer – means these are becoming a greater target. Tinnitus in both motor and casualty claims is continuously rising with even some of the judiciary raising concerns. In the casualty space, retailers are experiencing a significant rise in discriminatory claims, a rise that has not been seen in previous years. Housing disrepair continues to be an issue and is only on the rise while AI has unfortunately assisted in ‘escape of water’ claims.  

Collaboration: the key to success

There is basic technology that can and should be used in commercial claims, such as ANPR, CCTV and black box type technology on vehicles. These should be used to assist in identifying these claims and encouraging the insurance industry to work together to prevent the payment of these fraudulent claims.  

The key to success in this area continues to be the collection of the right data and also the need to collaborate within the industry to share the knowledge and experience of what these frauds look like. And, with the development of AI, taking the time to validate any evidence will become ever more essential. 

Image: Ruth Needham at Kennedys 

Guest Post This post was created just for Claims Media by a guest contributor.