Aviva, the UK’s largest insurer, recorded a 9.5% increase in the number of fraudulent claims it declined in 2016, fuelled by increases in fraud detection across motor bodily injury, household and liability claims. Aviva detected more than £85m of insurance fraud last year, or £232,000 worth of bogus claims every day.
Whiplash fraud remains biggest concern
Bodily injury frauds such as exaggerated or bogus whiplash claims continue to account for the majority of fraud Aviva identifies, both by volume and value of claims. Bodily injury fraud accounts for 59% of the total fraud Aviva detects – and this number grew by 4.8% in 2016. Aviva is currently investigating more than 16,000 suspicious bodily injury claims and declined 1-in-10 whiplash claims for proven or suspected fraud in 2016.
Organised fraud accounts for much of the new injury fraud Aviva detects. In 2016, Aviva declined claims worth over £25m linked to fraud rings. The problem is not going away, either, as Aviva is currently investigating more than 3000 suspect whiplash claims linked to organised fraud.
Creating a deterrent
Aviva is supporting and defending its customers and their reputations who believe they have been wrongly accused of being at fault for an induced accident or injury from a low-speed collision. This helps to protect customers’ premium, no claims discount and excess from the impact an ‘at-fault’ accident can have.
In 2016, Aviva had 154 fraudulent whiplash claims ‘struck out’ due to findings of fundamental dishonesty – more than any other insurer. When the Court finds a claimant to be ‘fundamentally dishonest’, it not only allows the judge to throw out the entirety of a claim, but it also means the claimant has to pay all of the costs of the action. Claimants caught lying or exaggerating could wind up paying tens of thousands of pounds in legal costs. Aviva also secured 29 successful criminal prosecutions for fraud last year, resulting in 29 years’ prison sentences.
Household fraud grows
Fraudulent household claims grew by 30% over 2015, while the value of these claims grew by more than 50%, as fraudsters submitted bogus claims for more expensive household items.
A growing trend in household claims are “serial claimants” – fraudsters who make multiple claims, often for the same item, by purchasing dozens of home insurance policies using different aliases. Policies are taken out with the sole aim of making fraudulent claims. Although these scams used to be rare, Aviva now detects more than 6 scams every month.
The most common fraudulent household claims were for accidental damage, theft and accidental loss. The average value of a fraudulent household claim was £1,315, with values ranging from as little as £25 up to £83,560. However, the large number of relatively low value claims indicates that fraudsters believe insurers won’t scrutinise low-value fraud.
Expensive technology items topped the list of most popular fraudulent claims Aviva received – perhaps an indication of wider economic factors. The 5 most common bogus claims were:
1. Accidental Damage to television
2. Accidental Damage to mobile phones
3. Accidental Damage to laptop/tablet
4. Accidental Loss of jewellery
5. Accident Loss of mobile phone
Liability fraud features strongly
Liability claims – made against an employers’ liability or public liability policy – also feature strongly in Aviva’s fraud figures and have the second highest frequency of fraud after whiplash. Aviva challenged and declined 6% of claims for fraud in 2016 and has over 1000 suspect liability claims under investigation. As the industry works together to clamp down on crash for cash, it is believed that fraudsters are moving into new areas and making bogus public and employer liability claims. In response, the Insurance Fraud Bureau has recognised the growth of liability fraud and is extending its remit from motor insurance to include liability and property fraud, which Aviva welcomes.
When it comes to fraud, prevention is better than detection. Aviva is moving the fight against fraud from the point of claim to the point of sale – stopping fraudsters from accessing its products and making fraudulent claims in the first place. Last year, Aviva avoided more than 13,000 motor policies due to fraud, up on 2015.
Fraudsters typically want to access cheap cover that they’re not entitled to or to buy policies so they can go on to make fraudulent claims. Often, fraudsters will deliberately misrepresent their address, claims histories or drivers. “Crash-for-cash” gangs will also fraudulently buy cheap policies to then make numerous bogus claims. In one instance, a gang from Birmingham took out hundreds of bogus policies at rural addresses and went on to make over 190 bogus claims worth over £3m.
Tom Gardiner, Head of Fraud at Aviva, said, “As our figures show, the fight against fraud continues relentlessly. But there is some good news: our investment in detecting fraud across all lines of business is seeing some very good results: we are prosecuting more cases, and by moving the fight against fraud to the front door we are stopping fraudsters from accessing our products in the first place. We vigorously defend our customers against fraudulent claims, even where it is not economic to do so, and will prosecute those people making fraudulent claims wherever possible.
“Looking at our bodily injury fraud data, it is clear that there continues to be an urgent need for fundamental reform of how minor personal injuries are compensated. The growing number of these scams is putting pressure on premiums. And, in the case of crash for cash, innocent motorists are put at risk and scarce public resources are diverted away from real need, such as emergency services, GP and A&E time. Whatever the outcome of the General Election, we hope that the incoming government will continue to prioritise these important reforms for the benefit of customers.”