Fraudsters' gain, our loss

Why insurance fraud is not a victimless crime. By Paul Slade

INSURANCE FRAUD is rising fast, and now adds as much as 10p in the pounds 1 to the premiums we all pay. The cost of fraudulent claims on household, motor and personal-accident policies reached a dismaying pounds 645m in 1998, up 8.4 per cent on the previous year's pounds 595m. Now the Association of British Insurers plans a press and leaflet campaign to combat increasingly "devious and organised" insurance cheats.

This sort of fraud is frequently seen as a victimless crime. ABI spokesman Vic Rance says otherwise honest people are often willing to boost the value of an insurance claim because they think the insurers can easily afford it. In fact, Rance argues, it is the honest policyholders who ultimately pay the price.

"Over a period of time, what we pay out in fraudulent claims, we have to get in as increased premiums," he says. "We're really just administering a pot of money."

The types of insurance hardest hit by fraud are motor insurance and personal accident, where there is plenty of scope for ill-defined injuries or mysterious damage. Rance says: "Whiplash injury is the great problem area. It's very easy to pretend you've got it and rather more difficult to show that you haven't."

Travel insurance is another prime area for fraudsters. A recent survey by specialist holiday insurers Home & Overseas concluded that as many as half the claims received for loss of personal possessions are either inflated or entirely bogus.

There are plenty of weapons that insurers can bring to bear in the fight against fraud. The Claims and Underwriting Exchange central database lets insurers routinely examine the whole industry's claims records to help throw up suspicious links between one claim and another.

Low-tech methods have their place too. Norwich Union says it is often prompted to further investigate a claim when the policyholder cannot say when or where the supposedly stolen goods were bought, is reluctant to meet the company's investigators or turns out to be word-perfect on the policy's most crucial clauses.

But insurers admit privately that they actually prosecute fraudsters only in the very largest cases. One claims manager, who asked not to be named, says: "It's a business we're running here. If we were going to prosecute someone who has defrauded us for a small amount of money, it really wouldn't be worth our while."

Would-be fraudsters can often be persuaded to drop a claim when confronted with the evidence, but this leaves them no worse off than they were when they started. Norwich Union Healthcare claims manager Marcus Makin says: "We prefer not to go to court, but we will if necessary."

THREE FRAUDULENT CLAIMS

MOT likely: Norwich Union received a motor claim from a customer whose policy was valid only while his car had a current MOT. It was clear that the date on his MOT certificate had been changed. Questioned by an NU investigator, the man claimed a burglar must have broken into his house, taken the MOT certificate, changed the date, replaced it and then left without stealing anything. Asked to reconsider the likelihood of this, the policyholder withdrew his claim.

Pig ignorant: A couple made a claim on their travel insurance after missing their flight home. They were careful not to mention that the wife had actually been banned from boarding the plane because she had a piglet in her hand-luggage.

Cheap trick: A Birmingham man made a claim of pounds 2,750 for a lost Rolex watch. Rolex registers all such watches under the buyer's name, but investigations showed no record of this man ever owning one. The watch was a fake, bought in Singapore for about pounds 2.99.

THREE WRONGLY REJECTED ONES

Strings attached: An insurer refused to pay a household-contents claim when a guitar was stolen from the family car. The Insurance Ombudsman ruled this was "contrary to normal expectation" and the company had to pay up.

Words apart: An insurer refused to pay a household-contents theft claim on the grounds that the policy's wording had been changed to exclude such claims when the policy was renewed two years earlier. The IO ruled that the new wording had not been sufficiently drawn to the policyholder's attention and the company then agreed to deal with the claim.

Card sharp: An insurer refused a policyholder's claim on his credit-card- payment insurance on the grounds that the illness which had forced him to stop work had existed before the policy started. The IO ordered the company to deal with the claim.

Sources: ABI, Home & Overseas, Insurance Ombudsman Bureau and Norwich Union

Property
pets
Arts and Entertainment
tvThe C-Word, TV review
Arts and Entertainment
The Ridiculous Six has been produced by Adam Sandler, who also stars in it
filmNew controversy after nine Native American actors walked off set
Sport
Danny Jones was in the Wales squad for the 2013 World Cup
rugby leagueKeighley Cougars half-back was taken off after just four minutes
Have you tried new the Independent Digital Edition apps?
Life and Style
ebookNow available in paperback
ebooks
ebookPart of The Independent’s new eBook series The Great Composers
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs General

    Recruitment Genius: Senior Digital Marketing Consultant

    £28000 - £45000 per annum: Recruitment Genius: A Senior Digital Marketing Cons...

    Recruitment Genius: Assistant Stores Keeper

    £16640 - £18500 per annum: Recruitment Genius: An Assistant Stores Keeper is r...

    Recruitment Genius: Claims Administrator

    £16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

    Recruitment Genius: Software Developer - C# / ASP.NET / SQL

    £17000 - £30000 per annum: Recruitment Genius: Developer required to join a bu...

    Day In a Page

    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power
    Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

    The price to be paid for challenging the rule of extremists

    A revolution now 'consuming its own children'
    Welcome to the world of Megagames

    Welcome to the world of Megagames

    300 players take part in Watch the Skies! board game in London
    'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

    Charlotte Gainsbourg on 'Nymphomaniac'

    Starring in one of the most explicit films ever
    Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

    Robert Fisk in Abu Dhabi

    The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
    Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

    Vince Cable exclusive interview

    Charging fees for employment tribunals was 'a very bad move'
    Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

    Iwan Rheon is returning to his Welsh roots

    Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
    Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

    Everyone is talking about The Trews

    Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
    Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

    It's time for my close-up

    Meet the man who films great whites for a living
    Increasing numbers of homeless people in America keep their mobile phones on the streets

    Homeless people keep mobile phones

    A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
    'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

    'Queer saint' who bankrolled artworld giants

    British culture owes a huge debt to Peter Watson, says Michael Prodger
    Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

    Pushkin Prizes brings countries together

    Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
    14 best kids' hoodies

    14 best kids' hoodies

    Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
    Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

    The acceptable face of the Emirates

    Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk