Thinking about committing insurance fraud? The consequences could make life difficult as the latest campaign from Cifas, the cross-sector fraud data-sharing organisation, outlines.
In recent years, organised crime activity has attracted more attention, in particular ‘crash for cash’ schemes, where perpetrators have staged accidents to claim large payouts, have become more prevalent. But, there remain plenty of people who would not typically consider themselves as ‘criminals’ despite committing
varying degrees of insurance fraud.
In 2018, there was a 27% increase in fraud, with Cifas figures showing the biggest increases were in household and motor insurance cases.
Young offenders more prevalent
Within household insurance, there was a 52% rise of claimants aged between 31 and 40, suggesting that relatively young homeowners were more likely to make fraudulent claims, while motor fraud was up 45%. Here, young drivers or ‘millennials’ aged 21 to 30 were found primarily to blame. It was also found that the share of millennials committing ‘fronting’ was up 18% on previous years.
Fronting occurs when a more experienced driver takes out a policy, naming an inexperienced driver on it, however, the novice is in fact the main driver of the vehicle. Cifas said that while overall fronting is down, it remains a serious problem for motor insurers and should never be used as a way of saving on premiums.
The Cifas ‘Faces of fraud’ campaign is about showing the daily temptations consumers face to commit fraud, showing why some are prepared to lie, exaggerate and deceive.
Consequences can be serious
While committing insurance fraud can seem like a victimless crime with few repercussions, the consequences can in-fact be severe. If found to be committing fraud, your policy can be cancelled and you could gain a record as a fraudster – also known as a ‘marker’.
Known fraudsters’ details are also held on the Insurance Fraud Register, used by many insurers at point of sale and when claims are made. Being held on such databases makes it far harder to buy insurance, but also other financial services such as mortgages and bank loans. At worst, an insurance fraudster could end up with a criminal conviction, fine and even prison sentence.
According to Cifas CEO Mike Haley:
“False insurance claims and fronting insurance policies are illegal. They can impact your life and career, making it near impossible to buy insurance in the future and can even lead to a criminal record. Second, committing fraud hurts everyone: your neighbours, your friends, people in the area, and the UK as a whole. Insurers have to spend longer reviewing insurance claims and policy requests, premiums go up, and everyone loses out.”
Insurance fraudsters in the dockThe following cases insurance fraud were all heard in 2019:
- Richard Agyemang of north London lied that he was ill and claimed nearly £20,000 in fraudulent travel insurance claims. He said he was injured or had food poisoning and had to rebook flights and hotels, claiming for these with fake documents. He was sentenced to 16 months imprisonment, after his suspiciously high volume of claims (all with different insurers) was probed by the Insurance Fraud Enforcement Department (IFED) – an insurer-sponsored police division.
- Maisie Edmonds, a former police constable, said her BMW car was stolen in Ealing, west London, when she was on duty. But, this was proved to be fraudulent. She pleaded guilty and was sentenced to a 10-week curfew from 9pm to 6am and ordered to pay a £400 fine, as well as £80 in court costs. She has since left the force.
- Suhail Hussain from Luton was sentenced to two years in prison for taking out 10 fraudulent fleet motor policies to cover around 70 vehicles, some of which had been involved in criminal activities. He had no authorisation to act as an insurance broker and also made fraudulent claims. “Not only did Hussain act deceitfully to take out numerous false fleet insurance policies, he also helped facilitate wider criminality,” commented Detective Constable Andrew Porcher, who the led the IFED investigation.
Find out more about how Xactium's enterprise risk management solution is helping Financial Services modernise their risk processes.