Increase In Fraudulent Motor Insurance Claims

In March 2019, Cifas announced that there had been a significant increase in fraudulent motor insurance claims here in the UK over a 12 month period. Cifas is a fraud prevention organisation that has many members who provide it with such data.

Motor insurance fraudulent claims witnessed the second biggest percentage increase at 45%. This is concerning for policyholders as it presumably results in higher motor insurance premiums being paid by all. It is the 21 to 30 year old age bracket that makes up the biggest groups of offenders.

On a positive note, the number of reported cases of fronting has fallen in the above period. Fronting is, for example, where say a parent claims that they are the main driver when in fact it is one of their children who usually drives the vehicle. This is done to reduce the cost of the cover.

According to the Association of British Insurers (ABI), in 2018, there were 55,000 dishonest claims relating to motor insurance scams identified with a value of £629 million. Apparently, 80% of these related to personal injury fraud.

If someone is proven to have submitted a false car insurance claim then there are potentially severe consequences. For instance, this illegal act could result in the insurance company refusing to pay out meaning that the person submitting a false claim could have to find the money to meet the cost of the claim themselves which could be a significant sum of money. It could result in the insurer cancelling the policy leaving the policyholder having to try to find another insurance company to provide cover. As a record of the fraudulent claim may be placed on the Insurance Fraud Register (IFR) and Cifas it may prove difficult to find alternative cover. If cover can be obtained elsewhere, the premium is likely to be higher than normal. It could lead to a criminal conviction and imprisonment.

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