A Cautionary Tail… Part 2

Insurance Fraud

Insurance fraud may take many forms, from misrepresentation on the application to fictitious and inflated claims.

Published figures for 2010* show :

  • Insurers uncovered 133,000 fraudulent claims valued at £919m a 9% increase on 2009
  • Household insurance had 66,000 bogus or exaggerated claims detected
  • Motor insurance detected frauds totaled 40,000 at a value of £466m

The financial consequences of this fraud are added to every insurance policy purchased i.e. we all pay for it in the form of higher insurance premiums.

In addition to the financial costs individuals detected committing fraud in relation to their insurance cover risk a great deal. At worst this could include custodial sentences, at the very least it will create severe difficulties obtaining insurance in the future.

Insurers have sophisticated detection techniques for uncovering fraud and potential fraud, but they also subscribe to CUE (Claims and Underwriting Exchange) a central database of motor, home and personal injury/industrial illness incidents reported to insurance companies, which may or may not give rise to a claim. If you fail to advise an insurer of a previous claim or incident they can and will check.

This is a cautionary tale for those who commit fraud as the industry is determined to eliminate as much as possible and impose the harshest penalties on those detected.

*source Association of British Insurers

For more information…