An end to “crash-for-cash” claimsmay be on the horizon as insurers warned they were declining far more claims for suspected fraud.
One major insurer detected nearly a quarter of a million pounds worth of bogus claims every day last year.
Aviva said it had seen a 9.5 per cent year-on-year jump in the number of fraudulent claims it declined in 2016, fuelled by increases in fraud detection across motor bodily injury, household and liability claims.
According to the insurance industry, around one in ten personal injury claims are linked to suspected “crash-for-cash” scams.
Whiplash fraud continues to make up the majority of bogus claims, with bodily injury fraud accounting for 59 per cent of the total fraud Aviva detects.
The insurer said it is currently investigating more than 16,000 suspect bodily injury claims.
Large insurance companies detected more than £85 million worth of fraud last year, the research suggests, equating to around £232,000 worth of bogus claims every day.
Organised fraud accounts for much of the new injury fraud companies detect, while Aviva found the majority of fraud it detects is now from third parties who are not its customers.
Last year, it declined claims worth more than £25 million linked to fraud rings.
There is a growing trend in bogus household claims from “serial claimants”, fraudsters who make multiple claims, often for the same item, by buying multiple home insurance policies using different aliases.
Policies are taken out with the sole aim of making fraudulent claims. While the claims are still rare, some companies are now detecting more than six of them 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.
Analysts suggested a large number of relatively low value claims indicates that fraudsters believe insurers will not scrutinise low-value fraud.
Liability claims, made against an employers’ liability or public liability policy, is also a source for fraud attempts. Aviva has more than 1,000 suspect liability claims under investigation.
As the industry works together to clamp down on “crash-for-cash” vehicle collisions staged by criminals, it is believed that fraudsters are moving into new areas and making bogus public and employer liability claims.
Tom Gardiner, head of fraud at Aviva, said: “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.”
Ben Fletcher, Director of the Insurance Fraud Bureau, said: “Insurance fraud is often regarded as a victimless crime but the reality is that it impacts the honest policyholder who ends up footing the bill. Co-ordinated motor insurance fraud scams, such as ‘crash for cash’ fraud, can potentially run into millions of pounds though fake personal injury and credit hire claims. Currently ‘crash for cash’ insurance fraud costs £336 million a year.
“We are not surprised that insurers like Aviva are detecting more fraud as the insurance industry is spending more money, year on year, to protect the honest policyholder.”