Insurance fraud seen as a serious crime by the public

Nearly one in ten adults, admit to making fraudulent insurance claims, according to a recent consumer survey by Experian, the global information solutions company.

The UK insurance industry pays out around £54 million a day in general insurance claims. However, more than one fifth of the population (21 per cent) believes that everyone exaggerates when making an insurance claim.

The survey aimed to uncover consumer attitudes towards insurance fraud and has found that the majority of the population (91 per cent) firmly believes that insurance fraud is a serious offence, but only a relatively small proportion (14 per cent) would definitely report someone who had actually committed insurance fraud.

David Murby, Managing Director of Experian’s Insurance Services division, said: “The survey revealed that people are well aware of what constitutes insurance fraud and consider it a fairly serious crime, which is not victimless, but they see it as a crime against an organisation rather than an individual and, as a result, appear less likely to report it.

“In fact, there appears to be a deeply entrenched impression that insurance fraud is commonplace in the UK, but the desire to do anything about it is not strong. Despite two fifths of the population claiming to know someone who has committed insurance fraud, the public is not inclined to report fraudulent activities.

“Therefore, it becomes even more important for insurers to be the ones taking steps to protect themselves and their customers from fraudulent activities.

“In addition, it would appear that the insurance industry collectively needs to raise the awareness amongst consumers of the impact of these crimes and work together to change the attitude people have about insurance fraud.”

The survey also revealed that incidents of fraudulent insurance claims are not limited to certain socio demographics. The likelihood of an offence being committed can be found across all social groups, whether they fall under ‘Symbols of Success’ or ‘Municipal Dependency.’

Overall, there is a perception amongst the public that the cost of insurance is high and the benefits are rarely seen. Consumers feel that they want to get value for money from their insurers so many, when making a claim, are likely to exaggerate it in the belief that the chances of getting caught are minimal.

David Murby continued: “Fraud continues to be a major challenge facing the insurance industry, costing an estimated £1.5 billion a year. There is little doubt that insurance fraud is seen as serious and people are generally aware that it is not a crime without consequences. However, only a small proportion of the population (15 per cent) feels that efforts by the insurance industry to combat fraud are sufficient, whilst over half the population (51 per cent) stated that they did not know whether the industry does anything or not.

“Fraud is a relatively new specialist area in insurance companies, with fraud itself previouslybeing viewed primarily as exaggerated claims. However, insurance fraud is evolving, and there has been a significant upsurge in organised fraudulent activitywith complex fraud rings, new types fraud, such as ‘slam-ons’ and staged accidents, contributing to higher premiums and greater pressures on the insurer-customer relationship.

“Insurers need to learn from one another as well as other industries that have adopted advanced processes to help them combat fraud. They need to ensure that they have in place effective processes that highlight inconsistencies and confirm facts. Experian’s anti-fraud solutions, for example, help insurers identify false, exaggerated, multiple and staged claims, non-disclosure, and false or stolen identities. Insurers need to be able to detect and avoid fraudulent activity at every stage of the insurance lifecycle.

“In addition to this, the onus is on the insurance industry to communicate with their customers and make them more aware of the effects of such a crime and what checks are in place that may deter the more opportunistic fraudster.”