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Organised gangs and chancers drive up insurance fraud detection rates by 10%

Close-up picture of a damaged car with broken headlights and dented bonnet
  • Aviva uncovered more than 12,000 instances of claims fraud in 2020, worth more than £113m
  • More than 19,000 claims are under investigation
  • Fraudulent policy applications and Ghost Broking grew by 34% 
  • Fraud expected to increase as financial hardship grows due to pandemic

Insurance claims tainted with fraud grew by 10% in 2020 during the height of the pandemic, leading UK insurer Aviva has found.

Aviva uncovered more than 12,000 instances of claims fraud in 2020, worth more than £113 million. That’s more than 19,000 claims under investigation and amounts to 33 a day – more than one every hour.

Whiplash fraud continues

Despite a fall in traffic volumes through multiple lockdowns, the proportion of fraud detected on motor injury claims grew by 20%. Whiplash fraud continues to represent the majority of detected fraud, accounting for 60% of all claims fraud detected. Over three-quarters of the motor insurance claims fraud Aviva detected was committed by third parties (i.e., not Aviva’s customers), and approximately 15% of motor claims fraud was linked to organised fraud activity.

The increase in detected whiplash fraud underlines the serious need for the new Whiplash Reforms called for by Aviva, which came into effect on May 31, 2021.

The increase in detected whiplash fraud underlines the serious need for the new Whiplash Reforms called for by Aviva, which came into effect on May 31, 2021. These will reduce the disproportionate compensation and fees in the system, strike at the root cause of whiplash fraud, and help to keep premiums low for genuine customers. Motor injury fraud is different than other forms of fraud in that it puts the public’s personal safety at risk through induced accidents such as crash for cash, and diverts scarce public services – including the NHS, ambulance, police and GPs – from where they are needed most.

Policy Fraud & Ghost Broking

Additionally, Aviva identified fraud on more than 29,000 motor policy applications, up by 34% on Aviva’s 2019 figures. Ghost Broking now represents approximately 20% of policy fraud, and is when an unauthorised person acts as an insurance intermediary fraudulently taking out motor insurance policies, often for a fee. Ghost brokers typically target vulnerable customer groups, such as non-English speaking communities and young drivers who face higher premiums. Aviva has a dedicated team focused on the problem and helping genuine customers, and has invested in technologies to improve prevention and detection.

Ghost Broking continues to present a significant threat to customers, both in terms of exploiting some innocent customer groups, potentially leaving them with worthless policies – essentially uninsured – but also by increasing the cost of motor premiums for honest customers.

Customers should be cautious of insurance offers from unclear, unsolicited or unusual sources, including online messaging platforms.

Customers should be cautious of insurance offers from unclear, unsolicited or unusual sources, including online messaging platforms. If customers have any concerns about the legitimacy of an insurance offer, they can check the broker’s status on the Financial Conduct Authority or British Insurance Brokers’ Association websites, or alternatively contact the insurer directly. If any Aviva customers have any concerns they can let us know via Aviva’s Fraud Hub. Ultimately, if a premium looks “too good to be true”, then it probably is.

Slips, Trips and Falls

Frauds committed against businesses’ employers liability and public liability insurance policies grew slightly, with the proportion of detected fraud up 5% on 2019 figures. Among the most common of these claims (one in four liability claims) are ‘slip and trips’. In some instances, fraudsters have tried to capitalise on the safety measures that businesses have put in place to prevent the spread of Covid-19. As an example, Aviva has identified multiple bogus injury claims stemming from a fall due to hand sanitiser on the floor. 

Property Fraud

The proportion of home insurance claims that were rejected for fraud grew by 26% in 2020. Home insurance fraud detection is a priority focus for Aviva in 2021 and the insurer expects to see the number of claims rejected for fraud continue to rise .

The most common types of detected fraud were bogus claims for accidental damage, accidental loss and theft. The average value for a fraudulent household insurance claim was £1,650. The most common fraudulently claimed items are mostly technology gadgets:

  1. Mobile phones
  2. Televisions
  3. Jewellery
  4. Laptops
  5. Tablets                      

David Lovely, Claims Director, GI, said, “The recessionary factors caused by COVID-19 have arguably created the biggest fraud threat to customers in a generation. Currently, government intervention is mitigating many of these financial impacts, but unfortunately we expect to see significantly more fraud in the coming year.

“Policy fraud, such as ghost broking, is one area in particular where believe we will see increases in attempted fraud, as people misrepresent policies to access cheaper premiums. As households and businesses come under increased financial stress, we expect to see more claims fraud, especially on home, small business and liability policies.

“The good news is that whilst we expect to see more fraud, we broadly expect it to be more of the same types of fraud, and we believe our existing controls will continue to respond very well. However, we remain vigilant for new types or methods of fraud, and are continuing to invest in strengthening our fraud controls over the next two years – to protect genuine customers from the impact of fraud, and to keep premiums low.”

-ends-

Enquiries:

Erik Nelson

Motor Insurance and Compensation Culture, Fraud and Data

Notes to editors:

  • For information on how Aviva is helping our people, customers and communities impacted by COVID-19 visit: www.aviva.com/covid-19-our-response/
  • We exist to be with people when it really matters, throughout their lives. We have been taking care of people for more than 320 years, in line with our purpose of being ‘with you today, for a better tomorrow’. In 2020, we paid £30.6 billion in claims and benefits to our customers.
  • Aviva is invested in our people, our customers, our communities and our planet. In 2021, we announced our plan to become a Net Zero carbon emissions company by 2040, the first major insurance company in the world to do so. This plan means Net Zero carbon emissions from our investments by 2040; setting out a clear pathway to get there with a cut of 25% in the carbon intensity of our investments by 2025 and of 60% by 2030; and Net Zero carbon emissions from our own operations and supply chain by 2030. Aviva has been leading this agenda for decades: Aviva was the first international insurer to go operationally carbon neutral in 2006 and we are champions of renewable energy and energy storage at our offices, allowing us to achieve our 2030 carbon reduction target (70% reduction on 2010 levels) 10 years early. Find out more about our climate goals at www.aviva.com/climate-goals and our sustainability ambition at www.aviva.com/sustainability.
  • Aviva is a Living Wage and Living Hours employer and provides market-leading benefits for our people, including flexible working, paid carers leave and equal parental leave. Find out more at www.aviva.com/social-purpose
  • We are focused on the UK, Ireland and Canada where we have leading market positions and significant potential. We will invest for growth in these markets. We will also transform our performance and improve our efficiency. Our transformation will be underpinned by managing our balance sheet prudently, reducing debt and increasing our financial resilience. We also have strategic investments in Singapore, China and India.
  • At 30 June 2021, total Group assets under management at Aviva Group are £522 billion and our Solvency II shareholder capital surplus is £12 billion. Our shares are listed on the London Stock Exchange and we are a member of the FTSE 100 index.
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