Fraudulent claims grew by 13% in 2021

We’ve uncovered more than 11,000 instances of claims fraud last year, worth more than £122m. That’s the same as detecting more than 30 bogus claims every day, worth a staggering £336,246. We’re also investigating a further 16,700 claims for suspected fraud.

Increases in the proportion of fraudulent claims detected were seen across motor, home and liability and the number of detected application frauds – including ghost broking – remain high. It’s vital we work together to make sure customers remain vigilant about unsolicited insurance offers from unusual sources.

Whiplash fraud continues

Motor fraud continues to account for 60% of all claim’s fraud detected. The Whiplash Reforms, which came into effect at the end of May 2021 and reduced compensation awards for minor whiplash injuries, are expected to reduce the incidence of motor injury fraud over time as the disproportionate compensation awards and fees are brought in line. This will remove the financial incentives for both organised and opportunistic fraud.

The proportion of fraud detected on motor injury claims last year grew by 10.7%, as organised fraudsters sought to take advantage of the opportunity prior to the introduction of the reforms, and traffic volumes returned following the easing of Covid-19 restrictions.

Motor injury fraud is different from other forms of fraud in that it puts the public’s personal safety at risk through deliberately organised accidents such as crash for cash, and diverts scarce public services – including the NHS, Ambulance, Police and GPs – from where they’re needed most.

There are early signs that organised whiplash fraudsters are focusing their efforts on fraud connected with the repair aspects of a motor claim, including credit hire and repair, which grew by 13% in 2021. We’ve seen particular growth in this area after the reforms came into effect, signalling a shift in organised fraudsters’ focus.

The most common fraudulently claimed-for items are mostly technology gadgets:

• Mobile phones
• Televisions
• Laptops
• Tablets
• Jewellery                  

Sharp increase in home insurance fraud

While only accounting for 13% of the fraud detected, the number of bogus home insurance claims identified shot up by 45%, the highest in seven years. We flagged last year that home insurance fraud detection would be a priority in 2022, with an expected increase in home insurance fraud and the cost of living creating additional pressures.

The most common types of detected home fraud were bogus claims for accidental damage, accidental loss and theft. The average value for a fraudulent household insurance claim was £3,645.

Slips, trips and falls

The rate of liability claims declined for suspected fraud committed against a business’ employers liability or public liability insurance policy grew by 12% in 2021. It’s believed that some of the organised parties involved in whiplash fraud have moved, or are moving, to pursue liability fraud. One in four (25%) bogus liability claims we rejected are for slips, trips and falls.

Policy fraud & ghost broking

We identified fraud on more than 20,000 motor policy applications. Of these, ghost broking accounted for 15% of all the application fraud detected. We have a dedicated team focused on the problem and have invested in technologies to improve prevention and detection.

Waseem Malik, Chief Claims Officer, Aviva UK General Insurance says;

“Insurance fraud is a crime and we are continuing to invest in strengthening our fraud defences to protect genuine customers from the impact of fraud and to keep premiums low.

Fraud is typically committed for reasons of need or greed and we believe the increase in claims fraud last year is linked to reduced incomes during Covid lockdowns.

As more households and businesses come under increased financial stress due to the cost-of-living crisis, we expect to see more claims fraud, especially on home, small business and liability insurance policies. Insurance fraud is a crime and we are continuing to invest in strengthening our fraud defences to protect genuine customers from the impact of fraud and to keep premiums low.

We will also be keeping a watchful eye on motor injury fraud this year, to see if it declines as the Whiplash Reforms bed in. Although it’s early days, we are starting to see some signs that organised fraudsters involved in motor injury fraud are moving into the repair side of motor claims, as well as liability frauds such as slips and trips.” 
 

^{* All figures quoted are based on Aviva’s own figures for the general insurance fraud it detected in 2021.}