Insurance Fraud - Social Perspective: Jan 2017

The issue of insurance fraud causes many debates; how widespread it is; its impact on premiums and of course questions around morality.

From a social perspective, it is interesting to see whether consumer attitudes are changing.  Is there a swing in insurers’ favour or is there still a divide between business and individuals in terms of insurance fraud being unacceptable?

An Aviva survey in their Road to Reform publication said that 87% of respondents believe that lying about injuries to make a claim is unacceptable.  Also the BBC’s Claimed and Shamed series on daytime TV, now in its 8th series (and featuring several cases involving Keoghs), has highlighted the issue of insurance fraud to a wider audience.

In a report from AXA, the Behavioural Fraud Report, a survey found that 1 in 20 people admitted they had committed insurance fraud.  This may sounds relatively small, but it equates to 2 million adults – and not everyone will admit to it.  Also 18% of those surveyed claimed to know someone who had defrauded an insurer, which increased to 31% of 18-24 year olds, which shows the actual number may be far higher (and a worrying trend amongst younger drivers), with reasons including a lack of trust between consumers and insurers (something we see as critical), and that fraud is ‘victimless’.  

Is it that there is a balance seen from consumers – outright lying is deemed unacceptable, but exaggeration is more of a grey area?

The fuel in the insurance fire that is cold-calling has also become very much topical, with many surveys showing that people are fed up of nuisance calls regarding accidents they’ve had in the last few years.  This behaviour has been condemned by both defendant and claimant sides.

One thing to consider here is for the potential for cold-calling in this area to take over from PPI claims nuisance calls.  If the Whiplash reforms go through in a manner that allows for more CMCs to represent claimants directly in small claims litigation, then in the absence of more robust regulation of CMCs (and in particular a ban on cold calling) we could see new level of cold-calling for small injuries. This is one of the many potential unintended consequences that could arise if the proposed reforms are not pursued as an effective and comprehensive package, which we will be discussing in other articles.

The SRA and Claims Management Regulation Unit have become more vocal about their efforts to tackle rogue callers, and it will be interesting to see what further measures are put in place and whether this has the necessary effect on reducing the number of claims where people are persuaded to ‘have a go’.

What do the numbers say?

The latest ABI figures show that 131,408 fraudulent general insurance claims were made in 2015, an increase of 6% compared to 2014.  The value of these claims totalled £1,310,616 – a decrease of 3% on 2014.  

In Keoghs’ own Fraud Index, we have seen the types of fraud attempted evolve, both in terms of what type of motor fraud is occurring as well as significant growth in non-motor areas.  Opportunistic fraud is on the rise, reflecting the impact CMCs have had on the market. Keoghs has had particular success in tackling late notified claims (see awards win).

From a social perspective, the next 12 months will be interesting.  With whiplash reform now high on the political and legal agenda, the push for claimants from more questionable CMCs is likely to increase before channels of profit are closed.  Will morality win the day or will it still be too tempting to be persuaded to ‘have a go’?