Insurance fraud jumps in hard times

Inflated car-repair bills, fake injuries and “fictitious” goods apparently stolen during home thefts are insurance scams that fraudsters regularly perpetrate. Largely because of the recession, insurance fraud is on the rise again.

FTSE 100 insurer Admiral, recently became the latest group to caution that it had witnessed a marked jump in fraudulent claims during the first part of the year, even some involving criminal gangs.

Admiral chief operating officer David Stevens, said that his company had referred about a third more suspicious claims than last year to its team of specialist.

Mr Stevens claimed that Admiral, which targets the UK car insurance market, had discovered cases of fake whiplash after minor prangs, or clients increasing the number of passengers they had in their car at the time of an accident.

“There is some evidence that people are either creating fictitious claims or lying about the number of people in their cars,” he said. “The industry is feeling some rise in fraud, including organised gangs committing fraud.”

According to Mr Stevens, in the 2009’s first half, the company identified fraud cases and thus avoided paying out 2 to 3 per cent of the premium total £404.6 million that it had written. Since some fraud cases are not detected, fake claims probably represent 4 to 5 per cent of all written premiums, he said.

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