Insurance fraud continues to rocket in 2009

11 September 2009, 1:29pm

New research amongst the UK’s leading insurance fraud investigators (IFIs) by Ordnance Survey reveals that insurance fraud is continuing to rise, despite soaring to record levels in 2008*.

Nearly three quarters (74%) of those interviewed have seen an increase in fraudulent claims since the beginning of 2009, and the problem is showing no signs of levelling out.

Four out of five (80%) investigators believe the situation will continue to get worse as they envisage the top issue facing them in the next 12 months will be the credit crunch further fuelling fraudulent claims, followed by fraud being committed at the point when people first take out their policies (43%). Motor insurance has been hit worst, with 34% of IFIs seeing an increase in fraudulent claims, although the problem is prevalent across the board in all classes of insurance.

Over two in five (44%) have seen an increase in the volume of fraudulent claims made and a similar number (46%) have seen an increase in both the volume and in the monetary value of claims made. Over half (57%) have seen a rise in the number of completely bogus claims made, followed by inflated claims (54%). Other scams on the increase include the number of serial claimants (47%), activity by criminal gangs targeting insurance companies directly (42%), activity by criminal gangs targeting insurance policy holders (35%) and people lying on application forms or withholding information to save money on policies (33%).

Consequently, fraudulent activity has moved up the agenda of most organisations (68%) and there has been increased investment in fraud detection (60%) to combat the problem, including fraud detection systems, supporting technology and staff.

According to Sarah Adams, Insurance and Banking Sector Manager at Ordnance Survey: “Insurance companies are not tolerating fraudulent activities and are making it a priority to crack down on insurance cheats. One area that is being used to effectively tackle the problem is the use of geography and mapping, which is being used by around three quarters of insurance fraud investigators to help highlight hot spots or patterns of fraud, and to help validate claimant information.

“For example, recent analysis using geographic intelligence highlighted how two seemingly unrelated postcodes with high volumes of fraudulent activity were in fact adjacent to each other. Our analysis has also uncovered the hidden spatial relationships between suspect addresses used by an organised crime gang, which would never have been identified through traditional data-mining techniques.”

Fraudsters who are caught run the risk of having a criminal conviction as insurance companies push for maximum penalties, as well as being unable to obtain insurance in the future.

Peter Upton, Chairman of the Insurance Fraud Investigators Group (IFIG), warns: “IFIG has over 260 members, including a number of police forces, who are all working hard to prevent and disrupt insurance fraudsters. We now have a number of detection tools at our disposal and, together with Ordnance Survey’s assistance, we are identifying more frauds and thereby protecting the innocent policyholders from increased premiums to pay for those fraud losses. People who consider defrauding insurers should really think again as they are very likely to be caught out."

Tall tales
Recent brazen attempts to try and hoodwink insurance companies include:

· One man tried to make a claim as a result of damage by a pet dog treading paint throughout the entire property. He didn’t actually own a dog and created the paw prints by hand and dribbled paint from the pot to suggest it was caused by the dog’s invisible tail!

· A man claiming on his unemployment policy asked to be dropped off at work on completion of an interview by the insurance company!

· Some people will go to any lengths, with a number of cases of self-mutilation (cutting off a finger or toe) in order to obtain a benefit under a personal accident policy.

· A lady claimed $20,000 as a result of falling and suffering a facial injury whilst out walking on holiday in the USA. Investigations revealed her stitches were as a result of a liposuction procedure.

· One policyholder claimed for the theft of food and drink at her property after a party. She claimed no food or drink was consumed at the party but when she woke the next morning it had all been stolen, including a bowl of coleslaw and pasta salad.

· Investigations into a claim for a road traffic accident revealed the engine of the vehicle involved had seized up some time ago and the vehicle could not have moved at all, let alone be involved in an accident.

· A lady alleged she was a passenger on board a bus that was involved in an accident. CCTV footage later revealed that she was actually standing at the bus stop at the time of the accident.

· A gentleman claimed for damage caused when he was cleaning a window, fell backwards over a rocking horse and falling into a display cabinet and grandfather clock – twice! He claimed with two different insurers but was caught out.

www.ordnancesurvey.co.uk

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