Fraud

Mark Colegate: Pete Ward is Head of Claims Counter Fraud at Aviva, and he joins me now. Pete, just to set things in context. How big a problem is fraud when it comes to the insurance industry today, in the round?

Pete Ward: Thanks, Mark. It's great to be with you. So unfortunately, fraud continues to be a real issue for insurers. To put it into context, it costs the insurance industry well over £1 billion a year, and that's a conservative estimate because it doesn't account for undetected fraud. We know that fraud accounts for 41% of all reported crime in the UK, yet it receives less than 1% of police resources allocated to its investigation. From Aviva's perspective, in 2024, we detected £127 million worth of fraud savings purely on claims, and that doesn't include all the policy fraud and the fraud prevention stats which go on top. And I think these numbers really sharpen the focus as to why fraud remains a real issue for insurers, Aviva included. It's precisely because of that that we've invested heavily in our counter fraud capability over the last few years, from a people perspective, but also technology, so that we've got really robust fraud controls in place to help us detect fraud.

Mark Colegate: When you talk about this rise in fraud, is that because you're getting better at detecting it, you said you've invested a lot more, or is it because there's more about? We hear things like there's a cost of living crisis.

Pete Ward: It's a great question, and it's an element of both. So history reminds us that it's often a correlation between times of economic hardship and a rise in fraud, and it's precisely because of that that we, a couple of years ago, took the conscious decision to really invest in our people and our technology. So from a people perspective, we've invested in their training, in their development, and from a technology angle, we've invested in advanced analytics, machine learning models, to help us really detect fraud as much as possible where it exists. I think optimum fraud detection models require a nice balance of human capability and also technology.

Mark Colegate: So where are some of the areas where you're seeing a particular growth in fraud at the moment?

Pete Ward: So we've seen a huge rise in what I would call opportunistic fraud, and by that, I mean where there is a genuine claim of some description, but there's such exaggeration that it taints all or part of the overall claim. If I'm to break that down into different lines of business, from a motor non-injury perspective, we've seen a rise in fraud arising from vehicle damage, from credit hire, from loss of use. In fact, we've seen over a 200% increase in those fraud areas since 2021. From an injury perspective, the whiplash reforms have undoubtedly had an impact in terms of frequency of those deliberate cash-for-crash scams. But what we are seeing is a rise in what I would call non-whiplash injuries and the implausibility of those injuries. So an example would be, we've seen recently a claimant claiming for a bruised ankle due to excessive braking, but they were a passenger, and we're not talking about a dual car control here, Mark. And then from a household and commercial property perspective, we've seen an exaggeration, particularly in the contents space. In commercial property, we've seen an 89% increase in fraud detection volumes, and in both areas, we've seen an element of cost layering from a small number of loss assessors. I'm at pains to say that not all, I'm not suggesting that all loss assessors are bad actors, but we've certainly seen some questionable behaviour from a small number of actors in that space.

Mark Colegate: You describe a world which moves from exaggeration to outright fraud, and I guess it's probably a little bit grey where the two overlap, but are there any negatives to being caught perpetrating this? What do you do, do you just sort of refuse the claim and say sorry, or do you get the police involved? What are the penalties for pushing it when it comes to insurance claims?

Pete Ward: So there can be some very serious consequences of committing fraud. At an industry level, there is something called the Insurance Fraud Register. That houses details of all proven fraudsters. So if you are on that register, fraudsters will find it more difficult to obtain products such as insurance, mortgages, and loans, and it can affect their credit rating. But we work very closely at Aviva, with law enforcement agencies, and we will pursue criminal sanctions where appropriate. So in 2024, working with, in particular, IFED, which is the Insurance Fraud Enforcement Department, an arm of the City of London Police, we secured custodial sentences for 10 individuals that defrauded Aviva and our customers. We also secured suspended sentences for a further 11 individuals who had perpetrated fraud against Aviva, and we also very recently secured something called a serious crime prevention order against a fraudster who deliberately targeted Aviva and our customers, and that placed quite draconian restrictions on the fraudster and their lifestyle, and if they breach any of those restrictions, it is an automatic custodial sentence. So in summary, fraud is not a victimless crime, and there can be quite serious consequences to committing insurance fraud.

Mark Colegate: You've mentioned opportunistic crime, but what are some of the other trends that you will see?

Pete Ward: So two of the trends which I would point out are ghost broking and paid ad spoofing. Both areas have been around for a number of years, but due to the increasing sophisticated nature of both, it's biting victims unfortunately harder than they've ever done before.

Mark Colegate: And can you dig into a little more detail on how ghost broking and paid ad spoofing operate?

Pete Ward: Sure. So ghost broking is the activity of fraudsters posing as insurance brokers, selling fake or invalid insurance online. They primarily target young drivers on social media, offering what looks like super cheap car insurance, but ultimately it's a worthless product because there's no valid insurance at the end of the transaction, and unfortunately, that exposes victims to driving around without valid insurance. That gives them liability for potential fines, conviction notices, and even in some instances, confiscation of their vehicle. And paid ad spoofing, on the other hand, is the activity of some unscrupulous companies paying for online search engine adverts that insinuate that they are associated with a trusted insurer when they're not, and their aim is to capture the claim for their own financial benefits, and victims will incur liability for credit hire, for storage, for recovery. And it's very easy to see how victims fall foul of this malign practice. So if you've been involved in a road traffic accident and you don't have your insurer's details to hand, it's natural to look for these on your phone, and very often, the first few results which come back on a search engine will look genuine, they will use generic sounding terms, but at the point which you call the number that's provided, you're then put through to an accident management company who then captures the claim, and the liability starts. Now I'm at pains to say that not all accident management companies are bad actors, but those ones that insinuate they are associated with a trusted insurer, or are an insurer, are frankly very harmful.

Mark Colegate: And is there anything else that Aviva is doing at the moment to take the initiative and get ahead of fraud, and to support brokers and their clients?

Pete Ward: Sure. So we've already alluded to we're investing heavily in our people and our technology, so we've got robust controls in place. We're also working collaboratively with the Insurance Fraud Bureau on awareness campaigns to tackle paid ad spoofing and ghost broking, and where appropriate, we share data with our industry peers. But my message to brokers would be, if ever you're unsure around any fraudulent claim, or you believe that your client has been subjected to a fraudulent claim, please do get in touch, we're here to help.

Mark Colegate: Pete Ward, thank you.

Pete Ward: Thank you.

Pete Ward: Hi Kat. It's great to be talking to you today to explore an issue which is very topical but also a real problem for the insurance industry and that's the malign practice of ghost broking. But for those watching that are unfamiliar with that term, are you able to explain what ghost broking means?

Kat Cunningham: So, ghost brokers are a scam whereby the fraudster acts as a insurance broker. They often target young drivers via social media with the intent to sell them an insurance policy, which is ultimately a worthless transaction as it's invalid. The big risk is the insured is driving without insurance, often unknown to them. Ghost brokers typically can act as lone individuals, or sometimes they are part of a wider, organised criminal activity and it can impact both personal lines and commercial insurance policies.

Pete Ward: Unfortunately, it's a real problem, isn't it Kat. So, whilst ghost broking has been around for some time, unfortunately, we are seeing a rise in this activity. You may be aware that we at Aviva, recently interviewed 2,000 young drivers around their shopping habits of buying car insurance via social media, and the results are both shocking and worrying. And our research shows that 30% of those young drivers confirmed that they had bought car insurance via social media. So, almost certainly all of those drivers will have dealt with a ghost broker and have invalid insurance. And 9 out of 10 of those drivers had reported issues with their insurance, for example, invalid details. When they had phoned their insurer to make a claim, they realised that they weren't insured, and in some instances, the young drivers had been pulled over by the police for driving without insurance. So, it's a real issue. But Kat, are you able to elaborate in terms of the type of activity of ghost broking that you and your team have seen in the last 12 months?

Kat Cunningham: Yeah, sadly, I can Pete. What we typically see is the use of stolen or compromised bank accounts or bank cards, and these are used to purchase multiple policies. We can see gross misrepresentation where, the details of use of address, policyholder details, driving history, have been misrepresented. We also see fake documents, proof of NCD or no claims discount. The other thing we see is identity theft. So, where a ghost broker has used clean identities or addresses, sometimes businesses, to set the policy up, and then afterwards they've added on the policyholder -  the fraudster -as an additional driver.

Pete Ward: It really is shocking and unfortunately this practice can dilute the trust that our customers have in genuine insurance brokers. But are you able to elaborate Kat in terms of how customers can fall victim to ghost broking?

Kat Cunningham: Typically, what we see ghost brokers doing is setting up a completely fake policy and providing fake documents. We see them taking out policies and then cancelling them just after inception having paid no premium. We see fake no claims discount documents being provided and policies that have been grossly misrepresented and therefore worthless.

Pete Ward: It's really interesting, but it's also so worrying. Are you able to provide details of what the consequences and what the customer impacts of ghost broking are?

Kat Cunningham: The impacts can be devastating and in some cases, life-changing. When someone is the unknown victim of ghost broker, this can result should the worst happen, they could be fined, they could be convicted, a vehicle could be impounded. There's often links to wider payment card and identity fraud, which impacts a wider group of victims. The victim can often find they have paid the ghost broker a fee or thinking it was premium, and that is worthless because they don't have a valid policy. Victims are left uninsured in the event of a claim and that can result in losses and liabilities for them. And then there's the wider impact of our genuine customers, who end up picking up the tab as a result of increased premiums that everyone pays the price for, for fraudulent activity.

Pete Ward: Clearly, ghost broking remains a real issue and that's why it's great to have discussions like this so we can raise awareness of this practice. But more broadly Kat, you lead Aviva's fraud prevention capability when it comes to application fraud and I wondered if you were able to provide some examples of the types of fraud that you and the team are seeing in this space.

Kat Cunningham: Yes, so in 2023 we identified fraud on over 50,000 motor policy applications. This is up on 2022 by over 60% as we continue to invest and train and develop our capability to detect as much fraud as we possibly can. This is key for us at Aviva to ensure that we're protecting our genuine customers and keeping as much fraud as we possibly can off our books. So, as you know Pete, here at Aviva, we want to spread the awareness of ghost broking activity as much as we possibly can. Are there any practical tips and advice you can offer to those watching on how to avoid becoming a victim of a ghost broker?

Pete Ward: Good question. Our advice for anybody watching this, who knows a young driver who's looking for car insurance is that if a deal looks and feels too good to be true, then it probably is. We would also advise avoiding dealing with anybody who will only communicate with you on social media or messaging apps. And if anybody watching this believes that they've been victim of ghost broking or know somebody that has been victim of ghost broking, then please contact the Insurance Fraud Bureau, contact Action Fraud or alternatively, contact the insurer who you think you're insured with who can then take the appropriate steps to refer this to law enforcement.

Kat Cunningham: Spot on Pete. It's been really useful to have this discussion today, ghost broking is going to continue as an emerging threat, with the increased usage of AI  - is something we're going to have to absolutely stay on top of in the future.

** End of video **

Pete Ward: It's great to be joining you again today, Rachael, for this our latest chat around fraud. And last time we spoke, we discussed the fraud landscape in 2023, but today I know that we're keen to raise awareness of a growing problem and that's the sharp practice of paid-ad spoofing and how that can manifest into spurious bodily injury claims. Perhaps we can also explore practical steps that our broker community and our customers can take in order to protect themselves against this malign practice.

Rachael Harkins: Thanks, Pete. It's a really interesting area. Let's start with the obvious question and that is, what is paid-ad spoofing, and why are Aviva, and specifically you and your team, so interested in the area?

Pete: Unfortunately, it's a complex and murky area. In its simplest form, it's the activity of some unscrupulous companies paying for online search engine adverts that insinuate that they are associated with a trusted insurer, when in fact they're not. Their aim is to capture the claim for their own financial benefit. Sadly, it's a growing problem. Many of us have found ourselves in the position of having been involved in a road traffic collision, standing at the side of the road having phoned the police, and if you don't have your insurer's details to hand, it's natural to try and look for these using an online search engine, most often on your phone. Very often the search results that appear will ostensibly look genuine and use generic-sounding terms that could apply to any insurer. The customer then phones the number that's provided, and at this stage, they're put through to an accident management company. They can then be drawn into legally binding agreements for hire, for storage, for recovery - which, if their claim against the at-fault insurer is unsuccessful, exposes them to significant financial harm.

Now, it's important at this stage to say that neither I, or anyone here at Aviva, is suggesting that all accident management companies are bad actors, but those ones that purport to be Aviva when they're not or suggest that they are associated with Aviva when they're not, are potentially very harmful.

Rachael: It's a sharp practice and it's worrying that an increasing number of customers are unwittingly following victim of this trend. I wonder if you could advise on the practical consequences and dangers if a customer is to fall victim of this.

Pete: It's a great question. Once a claim has been captured, a complex set of contractual agreements will be put in place on the customer's behalf and potentially, at their cost. Costs can include fees for hire, for storage, for recovery, and they can start accruing immediately after that initial call and often run into the tens of thousands of pounds. Now those customers that realise what's happened and look to their insurer to take over conduct of the claim, will often have to pay the costs of the accident management company in order to get their vehicle released.

Those customers, as a result, that are unable to repay those costs will find themselves in the position of being trapped in agreements against their will  -  agreements which are unlikely to have been explained to them very clearly. Whether a customer realises the position they're in or not, there remains a serious risk of financial harm, in that if the accident management company is unable to recover their costs from the third-party insurer, and this could be on the basis that liability is disputed or, as is often the case, that the insurer believes that the costs are inflated, the accident management company can look to the customer to recoup that shortfall.

An accident management company can even take a customer to court in some scenarios to recover their costs, and you can imagine the stress and upset that this may cause them.

Rachael: Absolutely and all of this delivers a really poor customer outcome.

Pete: Spot on, Rachael and this may provide a background as to why your team sees some of the spurious bodily injury claims that they do - those claims that are made against our customers.

Rachael: Absolutely, Pete. Customers will be unsure about who they're speaking to if they've clicked on the wrong link and this is also true of farmed claims. Using illicit data, claims management companies may contact customers and suggest that they're calling from or on behalf of the at-fault insurer, they may also suggest that there's a pot of money waiting for the customer for their injuries - if they have injuries - and all they need to do is attend a medical and the money can be theirs.

Customers may be encouraged to go for multiple medical reports for injuries they do not have, to go for rehabilitative treatment they do not need, or even to go for the wrong type of rehab care for the injuries that they do have. These are all costs that a customer could be liable for in the event that the claim is repudiated, and that risk is not always made clear to them. Where customers are injured, it is important that they receive the right care, attention and are compensated appropriately for their injuries. If they're in England and Wales, then they have the option to progress their claim directly on the Official Injury Claims portal if their injury is more minor in nature. If their injuries are more severe, or if they just want a helping hand through the process, then they can, of course, instruct a legal representative to support them in this journey. If they have legal expenses insurance through the motor policy, and that's something that their insurer can arrange, and in that event, they'll keep 100% of the damages in the event that their injury claim is paid.

So Pete, it's important that we tackle this latest issue and educate customers about the risk of becoming victim to paid-ad spoofing. So can I ask what we're doing to tackle this latest threat?

Pete: Sure.  In short, we're doing a huge amount and it's important that we work collaboratively with others to tackle what is an industry problem. So firstly, we've been working with the Insurance Fraud Bureau and we've launched a joint awareness campaign with them to really publicise this issue.

Secondly, we've been working with the College of Policing so now all road traffic officers, and these are the police officers that are most likely to attend the scene of any road traffic collision, they are equipped with QR codes and phone numbers that they can pass to Aviva customers to ensure that they get put through safely and immediately to one of our claims centers.

Thirdly, we are working on technology at the moment in an attempt to intercept this scam at source. The technology will immediately contact a customer if it detects that they have been involved in a collision. Ultimately, we're trying to use the platform that we have to really raise awareness of this growing problem. But from your perspective Rachael, is there any advice and practical steps that you could provide to our broker community and our customers so that they can protect themselves against this sharp practice?

Rachael: As we've mentioned, if you've had an accident and you're at the side of the road, you may be quite distressed and upset, and it's really easy to click on the wrong link on your phone, and advertently fall into the hands of a claims management company. That's why we would suggest that we make all of our customers aware that they should be saving their insurance claim number on their phone, or have it stored in the glove box, so that it's readily available in the event that they're unfortunate enough to be in an accident.

Also, following an accident, it can be quite confusing as customers may receive many legitimate calls from companies such as repairers, hire companies, or solicitors, and therefore customers should seek clarification about what companies will be phoning them following an accident. If they're ever unsure, they should have the confidence that they can phone their insurer or their broker and seek confirmation about what companies may be in contact with them.

Pete: That's good advice, Rachael. It's been great chatting to you again around fraud and raising awareness of this very important issue and I look forward to speaking to you again sometime soon regarding a different aspect of fraud.

 

 **END OF VIDEO**

If you're involved in a motor incident, it's important to tell us and your manager about it straight away. 

Here's why.

Let's say you bump into someone else's vehicle. You check the other driver and your vehicle are ok and then get on with your day.

You think that's the end of the matter, but the other driver reports the incident the same day. As the other driver's not at fault, they're put in contact with a credit hire organisation, and Aviva has lost the opportunity to get in touch and help. For example, by offering the other driver repairs or a courtesy vehicle. This makes it harder for us to control the cost of the claim and crucial evidence such as CCTV or in vehicle camera footage, which can help us build up a picture of what's happened, may be lost.

The additional cost of the incident such as repairs, recovery, storage and a hire vehicle, could affect your employer's motor insurance and impact their operating costs in the future. 

Let's say the same incident happens, but Aviva and your manager are contacted straight away.

You call from a safe place reporting the other driver's full name, telephone number, vehicle registration and a summary of what happened.

Further details and evidence are also collated at the scene and reported as soon as possible. 

This gives us the best chance of helping you and anyone else involved. Keeping costs to a minimum, reducing the opportunity for fraud and getting you back on the move. 

So, if you're involved in a motor incident, tell us about it straight away, whether it was your fault or not and even if the damage appears minimal. And let us know the other driver's contact details and any key information. 

The sooner you report it, the sooner we can help. 

If one of your drivers is involved in a motor incident, it's important to tell us about it straight away.

Here's why. 

Let's say one of your drivers has a small road traffic collision. The damage appears minimal, so your driver doesn't report the incident promptly.

However, the other driver reports the incident the same day and is quickly represented by a credit hire organisation.

Aviva aren't notified for a couple of weeks which means the opportunity to get in touch and help has been lost, for example by offering repairs or a courtesy vehicle to the other driver.

This may lead to additional costs such as repairs, recovery and storage and a hire vehicle until the other driver's vehicle is fixed - which could impact your business's motor insurance and operating costs in the future.

If your fleet had multiple collisions, what would the impact and cost be for your business?

Let's say the same incident happened, but Aviva is contacted straight away.

This gives us a better chance to offer support and contact the other driver and mitigate the cost of the claim. Plus, you can obtain crucial evidence from CCTV or in-vehicle cameras, reducing the opportunity for fraud.

There are several ways that motor incidents can be reported, but Aviva speaking to your driver directly, makes it easier to determine liability and arrange any assistance they or the other driver may need.

So, if one of your team is involved in a motor incident, tell Aviva about it straight away, providing the other driver's full name, telephone number, vehicle registration and a summary of what happened. Further details and evidence should be collated at the scene and reported as soon as possible. This will give us the best chance of helping your driver and anyone else involved.

The sooner the incident is reported, the sooner we can help.