Cost of living crisis to trigger a “pandemic of fraud”
The insurance industry is seeing fraudulent claims increase amidst the cost of living crisis, according to new data from Weightmans.
The insurance industry is seeing fraudulent claims increase amidst the cost of living crisis, according to new data from national law firm Weightmans.
More than half of industry professionals say they are currently seeing a significantly higher number of fraudulent insurance claims than in previous years, with 97% expecting the volume to increase further as a result of the cost of living crisis.
The findings come from a survey of IFIG (Insurance Fraud Investigators Group) members, including insurers, law enforcement and regulatory bodies, who attended the Group’s most recent conference.
The event, hosted by Weightmans at its Liverpool head office, brought together more than 70 industry professionals for the Group’s first in-person event since Covid, to discuss the latest developments in the sector and how to tackle fraud.
Industry professionals identified the types of fraudulent claims where they are seeing the most significant increase in volume as credit hire (60%), such as the fabrication of invoices supposedly for hiring a replacement vehicle, bent metal (45%), for example, purchasing an already damaged vehicle to claim it was involved in an accident, and home claims (35%), such as falsely claiming a high value item had been damaged or stolen.
Fraudulent claims are also becoming more sophisticated, with two thirds of those surveyed saying they are seeing more complex fraudulent claims being made than in the past.
Mike Brown, Head of Fraud at Weightmans, commented: “We are seeing a pandemic of fraud in the current climate, with the cost of living crisis and imminent recession acting as a breeding ground for fraudulent claims from financially vulnerable members of the public as well as organised fraudsters.
“We’ve already seen fraudulent claims begin to rise. According to ONS data, all types of crime, including burglary, theft and knife crime, have fallen against March 2022 levels, with the exception of fraud, which is up by 4%. Not only has fraud increased as a crime type, ONS further reports that as an offence is the most commonly experienced crime in England and Wales today. It accounts for approximately 41% of all crime against individuals. And I believe that trend is only set to be exacerbated by the current economic turmoil people are experiencing, causing significant harm to the businesses and individuals targeted.”
Ami Fromson, Chair of IFIG, said: ““Collaboration is very much at the heart of IFIG and with fraud on the rise, it’s essential that sector professionals across all different disciplines come together to tackle the increased fraud risks the industry is facing .
“Events such as the IFIG conference hosted by Weightmans serve as an intelligence forum, providing a valuable opportunity for us to discuss the trends we’re seeing, as well as strategies to tackle it.
“Conversations and presentations throughout the day allowed professionals to share current trends such as an increase in fraudulent claims arising from public liability incidents, personal injury claims which are notified very quickly after an incident (in some cases, a few hours after the incident), high risk and potentially fabricated medical evidence, and claims layering, particularly in relation to treatment fees. Such exchanges of knowledge will be essential in combating fraud during this period, enabling colleagues to identify potentially fraudulent claims more quickly and accurately.”