The UK Association of British Insurers (ABI) estimates that fraud adds, on average, an extra £50 to the annual insurance bill for every UK policyholder. According to ABI figures, in 2014, insurers uncovered 130,000 fraudulent claims worth £1.32 billion. There are a variety of Insurance Fraud typologies utilised by fraudsters.
The City of London Police (CoLP) Economic Crime Directorate is recognised as the national policing lead for fraud in the UK and is dedicated to preventing and investigating fraud at all levels. The Insurance Fraud Enforcement Department (IFED) identify multiple insurance fraud typologies. We have listed six below. Some seem quite similar on first glance.
Test your knowledge – can you provide a definition for each?
Have a go, then reveal the correct answers.
This can include submitting a claim for damage sustained in a collision that did not occur as the result of an accident. For example, transporting pre-damaged vehicles to an accident ‘black-spot’ to create the impression an accident has occurred.
The deliberately induced accident or ‘slam-on’ consists of organised criminals targeting innocent motorists by provoking collisions to facilitate compensation payment for this such as injury damage, hire vehicles, recovery and storage. Commercial vehicles are particularly popular targets.
Opportunist and organised phantom passenger claims can arise as a result of both genuine and staged accidents. Many induced feature vehicles packed with claimants, all of whom claim to have been injured.
A policyholder dishonestly misrepresents or fails to disclose material facts in order to lower the insurance premium. This can include non-disclosure of claims history, points on a driving licence, and/or car modifications.
Professional enablers are the associated professionals e.g. solicitors, engineers, doctors and vets, who are complicit in submitting and progressing fraudulent claims, from staged accidents to fictitious personal injury claims. Other specialist service providers such as Accident Management Companies (AMCs), recovery agents and engineers also come under this umbrella.
Information illegally obtained from insurance companies can be sold on to accident management companies or personal injury solicitors. In turn, personal information is misused to solicit and ‘induce’ potential claimants into submitting personal injury claims, sometimes with little regard for its validity.
How did you get on?
Did you get them all? There are similarities and distinctions between many of the insurance fraud typologies outlined above – but the key driver is the deception and the impact is huge for all concerned.
The new ICA Advanced Certificate in Managing Fraud can help in managing fraud risk more successfully. Find out more about managing risk in the insurance sector here.
(For further information on the typologies above, please see the CoLP website: https://www.cityoflondon.police.uk/advice-and-support/fraud-and-economic-crime/ifed/Pages/Types-of-insurance-fraud.aspx).