How insurance fraud is costing you

Insurance fraud is any act that is committed with the intent to fraudulently obtain payment from an insurer. According to estimates from the Association of British Insurers (ABI), undetected fraudulent insurance claims total £1.9 billion every year. Of this figure, the Insurance Fraud Bureau (IFB) estimates £350 million is lost to fraudulent organised motor insurance claims annually. This means that honest customers lose over £4 million every week to fraudulent insurance claims. As a result, an average £44 is added to the annual policy holder’s cost each year.

Organised insurance fraud

From fraudulent arson to induced motor accidents, organised insurance fraud in the UK has become increasingly complex. In the case of induced motor accidents, for example, the organised gangs force innocent motorists to crush into the back of gang members’ vehicles and then make bogus claims against the innocent motorist. The claims often include accounts of fictitious injuries from gang members who may not even have been involved in the accident.

Other examples of fraudulent insurance claims include supplier fraud where the criminals give bills to insurance companies for work that has not been done. Fraudulent disability claims are another example where the fraudsters pretend to have some form of disability and claim disability benefits. The existence of true disability, fraudulent claims only make investigating the crimes more complex.

What is being done?

The Insurance Fraud Enforcement Department (IFED) was launched in 2011 to combat insurance crimes. IFED, an independent special insurance fraud unit, is run by the City of London Police and supported by the Association of British Insurers (ABI). Its mandate is to tackle insurance fraud across the UK. The 34-strong team is especially keen to look into case referrals from the insurance industry although it can initiate its own investigations.

The Insurance Fraud Bureau (IFB) also conducts insurance fraud investigations in conjunction with UK police forces and local and international investigating agencies. IFB is currently focusing on home, motor and personal injury claims, as of 2012.

In light of the success of these insurance fraud agencies, insurers are looking at ways of extending the agencies involvement in other high risk, insurance crime areas.

Bottom line

The government has adopted a more robust method of combating insurance fraud to ensure you don't lose any more money through false insurance claims. It has aligning its objectives with IFED, IFB, Police and other investigation agencies to protect all individuals and businesses from the effects of organised crime. The message is clear now more than ever before: making falsified insurance claims is more likely to get caught and bring you a severe fine and or jail sentence.

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