The most common types of insurance fraud - and how to fight your corner if you fall victim

Some forms of insurance fraud have spiked during the cost of living crisis, and innocent drivers are getting caught up. 

Claims fraud cost the insurance industry more than a billion pounds last year, according to new figures from the Association of British Insurers (ABI).

While overall reports fell due to the introduction of new legal reforms to reduce personal injury claims, some specific forms of fraud appear to be on the rise.

We surveyed 111 Which? members who'd experienced insurance fraud in the last five years, and found identity theft, induced accidents and false claims were most common.

Read on to find out more about the key types of insurance fraud, and the steps you can take to protect yourself. 

'Opportunistic' insurance fraud

According to the City of London Police, 'opportunistic' insurance fraud cases rose by 61% between March 2022 and April 2023. 

Opportunistic fraud is defined as occurring when 'somebody spots a chance in their everyday life to exaggerate a claim for financial gain, or provide false information when applying for insurance'.

A survey carried out in June by the Insurance Fraud Bureau (IFB) found one in 10 people said they would consider making a fraudulent insurance application or claim if they were struggling financially.

The sale of fake policies by so-called 'ghost brokers' can also involve ID theft, with fraudsters using innocent customers' personal details to orchestrate their scams.

Claims fraud

'Crash for cash' scams - where fraudsters intentionally cause collisions to profit from insurance payouts - are the most notorious form of claims fraud, with the potential to cause physical harm. Some 14% of fraud victims we heard from believed they'd been targeted in such 'accidents'.

Signs you've been targeted in a 'cash for crash' scam

Here are the telltale signs that an accident has been staged to get an insurance payout - and what you should do if you're affected:

Application fraud

According to IFB's research, application fraud is increasingly tempting to younger drivers - with 27% of 18-24 year-olds surveyed admitting they'd consider lying on an insurance application to save money - up from 21% last year. 

With premiums at record levels, this is unsurprising. Data from Confused.com shows the average car insurance premium for a 19-year-old is now £2,097 - and £2,404 for the average 18-year-old.

Find out more: 

Ghost brokers

Widely felt cost pressures are being further exploited by 'ghost brokers'. These are scammers, operating mostly on social media, who claim to be able to secure car insurance at reduced prices (for a fee).

However, they bring the prices down by simply changing elements in the application that would push them up - for example, altering the customer's address, details of the car and claims history.

Find out more: 

Identity theft

However, ghost brokers have secondary victims - those whose identities are used to apply for the policies. This was the most common single experience of insurance fraud among the victims we surveyed.

For insurance alone, the numbers of cases referred to Cifas - an organisation founded to help prevent identity theft - rose by 15% in 2022.

According to Cifas, most of these cases relate to attempts to obtain insurance in a different name - most likely to make fraudulent claims or build a profile to establish an address history. A large number were also in relation to ghost brokers.

Find out more: 

Victims of dubious claims

According to recent research by comparison website Compare The Market, drivers with an at-fault claim on their record pay, on average, 12% more than customers who haven't been involved in an accident - although this difference can be as big as 141% depending on where you live.

Worryingly, one in ten members we polled who claimed they'd experienced fraud, gave accounts of claims made against them for incidents they deny any involvement in. 

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Some 11 of the 111 customers we surveyed claimed to have been falsely implicated in similar ways, with several expressing deep frustration at how little pushback their insurer gave.

One customer told us that they could understand why their insurer ultimately decided to settle a disputed claim made against them - but were particularly annoyed at not having been given any advance notice of the decision. Had they received this, they would have offered to take the case to court themselves - accepting any costs if they didn't win.

Find out more: 

Four ways to help a claim go your way 

Collect evidence:Find witnesses:Use dashcam evidence: Challenge decisions: 

Which? Limited is registered in England and Wales to 2 Marylebone Road, London NW1 4DF, company number 00677665 and is an Introducer Appointed Representative of the following: 

1. Inspop.com Ltd for the introduction of non-investment motor, home, travel, pet, van and temporary insurance products (FRN 610689). Inspop.com Ltd is authorised and regulated by the Financial Conduct Authority (FCA) to provide advice and arrange non-investment motor, home, travel and pet insurance products (FRN310635) and is registered in England and Wales to Greyfriars House, Greyfriars Road, Cardiff, South Wales, CF10 3AL, company number 03857130. Confused.com is a trading name of Inspop.com Ltd. 

2. LifeSearch Partners Limited (FRN 656479), for the introduction of Pure Protection Contracts, who are authorised and regulated by the FCA to provide advice and arrange Pure Protection Contracts. LifeSearch Partners Ltd is registered in England and Wales to 3000a Parkway, Whiteley, Hampshire, PO15 7FX, company number 03412386. 

3.Which? are an Introducer Appointer Representative of Optimise Media Limited (FRN 313408), for the introduction of HSBC Group, who are authorised and regulated by the Financial Conduct Authority to provide credit brokering activity. Optimise Media is registered in England and Wales to Exchange Street Buildings, 35-37 Exchange Street, Norwich, England, NR2 1DP and company number 04455319. 

We do not make, nor do we seek to make, any recommendations on financial products or services that are regulated by the FCA, as we’re not regulated or authorised by the FCA to advise you in this way. In some cases, however, we have included links to regulated brands or providers with whom we have a commercial relationship and, if you choose to, you can buy a product from our commercial partners. If you go ahead and buy a product using our link, we will receive a commission to help fund our not-for-profit mission and our campaigns work as a champion for the UK consumer.



source https://www.which.co.uk/news/article/the-most-common-types-of-insurance-fraud-and-how-to-fight-your-corner-if-you-fall-victim-a6F0T5S0mYjY
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