The national database launched earlier this year to combat motor insurance fraud has claimed its first cheat.
A policyholder claimed that his car had been stolen and recovered stripped. A check on the database revealed that he had made exactly the same claim on the same vehicle six years ago.
The national database, launched at the beginning of the year by the ABI and run by vehicle information experts HPI, contains details of all vehicles written off following an accident or reported stolen. It helps identify fraudsters, for example by detecting those who insure their vehicle with several insurers at the same time and then try to claim from each following an accident, or having reported the vehicle as โstolenโ.
The database is already having an impact. A recent survey by Third Stage Enterprise Solutions of insurers using the system showed that:
- 61pc of claims staff had already identified a โmatchโ, that needed further information
- nearly three โ quarters felt that the database will act as a real deterrent to fraud
- 85pc of insurers felt the database would trap any attempt at fraud
What they say
Justin Jacobs, Head of Motor and Risk Pricing at the ABI, said: โ Greater use of technology and data sharing is the way forward in the war on insurance fraud. The independent survey clearly shows that the database is delivering a twofold benefit: helping insurers detect more fraud, and acting as a deterrent to make anyone thinking about cheating on their insurance to think again. The survey shows us where to target further system improvements to continue to clampdown on criminal activityโ.
Miles Keeble, Chair of the ABIโs MIAFTR Management Committee and Business Development Controller at Cox Insurance, said: โ The database is clearly doing its job well โ helping insurers to deter and detect insurance fraud. In a short space of time, the system is already providing real benefits for insurers and honest policyholders.โ
Figures issued by the ABI (Association of British Insurers) show meanwhile a dramatic rise in the value of fraudulent insurance claims being detected by insurers, with dishonest claims totalling over £3.5m a week now being exposed. Frauds uncovered range from deliberately smashed TVs, invented burglaries, and faked personal injuries to highly organised scams.
A survey by the ABI of insurers who cover two-thirds of the general insurance market showed that fraudulent claims valued at £200m were uncovered in 2004. This 95pc rise on 2002 reflects increased resources, new fraud detection techniques and sharing of information between insurers, according to the association.
Insurance cheats exposed include:
- A claim for a damaged carpet caused by โaccidentalโ spillage of paint was rejected when forensic tests showed it had been deliberately applied.
- Following a claim for a burglary, the โstolenโ items were discovered being stored in the claimantโs loft.
- A man claiming to be unable to walk due to a back injury was found out when a picture appeared in his local paper of him collecting an award for top goal scorer for his local football team.
- A woman reported her โcrippledโ husband for exaggerating his injuries in a car accident after he walked out on her.
โContrary to what some people think, insurers are no soft targets for fraudsters, and that is good news for honest policyholdersโ, said Chris Hannant, the ABIโs Head of Financial Crime Prevention.
โProtecting honest policyholders from the dishonest minority is a priority for the insurance industry. As well as weeding out the opportunistic cheats, the industry is also tackling the more organised frauds. Insurance cheats not only face the increasing risk of getting a criminal record, but will find future insurance and credit much more expensive and harder to obtain.โ
Common frauds being detected include:
- Staged motor accidents. These involve criminal gangs deliberately staging motor accidents with innocent motorists, then claiming for damage to the vehicle and whiplash neck injuries, backed up by witnesses, who turn out to be part of the scam.
- Personal injury claims against local authorities alleged to have been caused by tripping over paving stones, which were actually sustained in unrelated incidents.
While it is becoming increasingly difficult to get away with insurance fraud, the industry continues to develop initiatives to stay ahead of the fraudsters. For example:
- The ABI โCheat lineโ offers a free confidential service to enable people to report suspected or known insurance fraud. It plays an important part in identifying fraud, and has led to criminal prosecutions and recovery of funds.
- The development of a database, which enables insurers to quickly spot potential fraud from information held across multiple insurers.
