A boost in so-called “cash for crash” scams and fraudulent whiplash injury claims is blamed for the sharp improvement in insurance fraud detected by Britain’s biggest insurer.
Aviva said it discovered more than 110m in fraud in 2013 C up 19% for the previous year C which was currently uncovering 45 fraudulent claims each day.
However, while policyholders submitting inflated or invented claims for supposedly stolen or damaged valuables continues to a concern, Aviva revealed that increasingly, insurance fraud was performed by businesses making claims against its customers C for example, for spurious injuries resulting from a car accident C via organised gangs.
A mixture off factors along with the challenging financial system, the fact that many individuals view it as being a victimless crime, plus a lack of effective deterrents are typically making an effort to improve the number of installments of insurance fraud, Aviva warned.
The most frequent type is motor injury fraud, which makes up about 54% of Aviva’s total detected claims fraud costs. More than half of them involve cash for crash scams, where individuals submit false claims for damage and private injury regarding car accidents that either never happened or were staged.
Tom Gardiner, head of fraud in the insurer, said: “We are witnessing a trend toward any such injury and organised fraud. Including, in 2013 we identified fraud in a in nine any such injury claims.”
Aviva is currently investigating more than 5,000 suspicious injury claims caused by known fraud rings C an increase of 20% since 2012. The insurance policy Fraud Bureau estimates you in seven injuries claims are linked with suspected cash for crash claims, while using total annual cost to insurers because of scams estimated at 392m.
The company’s largest successful fraud prosecution involved a lot of organised and bogus whiplash claims with a potential valuation on in excess of 5m, where sentences which can be between four and seven years were offered. In other cases, those convicted have received suspended sentences, community service and fines of some hundred pounds, which Aviva said “serves only a small amount deterrent with the future”.
One concern is that although almost all those who find themselves asked say insurance fraud is unacceptable, many turn a blind eye with it, said a company spokesman. Market research established that two-thirds of people would not report it to the police if a person they knew committed insurance fraud, a 53% increase than the 2008 survey by Aviva.
The public also seems to underestimate the impact of fraud; just 10 % think they will be tormented by it, whereas the truth is everyone is impacted via higher premiums. More road accidents develop from fraudsters seeking injury compensation, Gardiner added.
In July 2013, a study by MPs said insurers must put “their house in order” to cut back fraudulent whiplash injury claims, that contain added 90 to each and every motor policy.
Ministers should look into decreasing the limitation period for road accident insurance claims, and wish whiplash claimants to create more medical evidence, said a family house of Commons transport committee report.