Aviva detects £110 million of insurance fraud, up 19% over 2012

Article date: 23 April 2014

  • Organised gangs behind fraudulent claims

Aviva, the UK’s largest insurer, detected over £110 million worth of insurance fraud in 2013 – a 19% increase compared with 2012. Aviva detects over 45 fraudulent claims per day worth more than a total of £300,000.*

Aviva’s figures show that insurance fraud is a diverse crime and can range from exaggerating genuine claims or injuries to entirely fictitious claims and accidents. Increasingly, insurance fraud is carried out by third parties – people who are not insured with Aviva but who are making a claim against an Aviva customer (e.g. for spurious injuries as a result of an accident) – and also by organised gangs.

Tom Gardiner, Head of Fraud at Aviva, says “Our priority is to pay genuine claims quickly and fairly while offering a great service to our customers. Last year in the UK, for example, Aviva settled over 910,000 claims worth £2.65 billion. We identified fraud on less than 1.9% of claims we received.

“However, a combination of factors including the economic climate, social attitudes toward insurance fraud as a ‘victimless crime’, and a lack of effective deterrents are increasing the frequency of insurance fraud. The good news is that we are constantly improving our ability to prevent and detect fraud, helping to keep premiums down for innocent policyholders. The ABI estimates fraud adds £50 to the cost of insurance premiums.”

Who are the fraudsters?

The most common type of fraud in the UK, according to Aviva, is motor injury fraud, which represents 54% of Aviva’s total detected claims fraud costs. Over 50% these are from organised so-called “cash for crash” claims.  

Organised fraud is often linked to wider gang-related crime – and puts innocent motorists at risk, diverts scarce emergency service resources away from real need, and has a significant impact on premiums and the public purse.

Gardiner continued, “We are witnessing a trend toward third party, injury and organised fraud. For example, in 2013, we identified fraud in one in nine third party injury claims.”

Aviva has a market leading capability focused on organised fraud detection and currently is investigating 5,500 suspicious injury claims linked to known fraud rings – an increase of 20% since 2012. The Insurance Fraud Bureau (IFB) estimates that one in seven personal injury claims are linked to suspected “cash for crash” claims; the total annual cost to insurers for cash for crash is estimated at £392 million every year (IFB).

Detection

To help combat organised insurance fraud, Aviva has a team of 25 staff dedicated to detecting and prosecuting organised fraud – the largest resource of any UK insurer. Aviva also works with other insurers, the IFB and the Insurance Fraud Enforcement Department (IFED) to share information and prosecute cases.

Aviva’s largest successful fraud prosecution concerned organised and bogus whiplash claims, including over 200 claims with a potential value of over £5m, where sentences of 4-7 years were handed down.

Consumer Concern

There is considerable concern among consumers about the scale of insurance fraud. Research conducted by Aviva** found 9 in 10 people believe it is unacceptable, and almost 2 in 3 (64%) want insurance companies to do more to tackle fraud.

Despite this, many people turn a blind eye to fraud. Two-thirds (66%) of people would not report it to the police if someone they knew committed insurance fraud – a 53% increase compared to a 2008 survey by Aviva. Consumers also appear to underestimate the impact of fraud as just 1 in 10 think they will be affected by it, whereas in reality, everyone is affected by it in the form of higher premiums, and more road accidents are caused by fraudsters seeking injury compensation.

Aviva’s research also found that 23% of people knew someone who had exaggerated a genuine claim and 17% knew someone who had faked a whiplash injury to obtain compensation. The number of people surveyed who said they would consider exaggerating a claim increased by 35% to more than one in eight, compared to 5 years ago. Perhaps it is no surprise, then, that 92% of people believe dishonesty is a problem in today’s society, up from 75% in 2008.          

-Ends-

If you are a journalist and would like further information, please contact:

Aviva Press Office:  Erik Nelson, 01603 682264, erik.nelson@aviva.co.uk              

* Aviva claims fraud detection data for 2013
** Consumer research conducted among 2,015 UK adults by Opinion Matters

Staged Accident Case Study:

Bogus injury claims and staged motor accidents are a major problem facing insurers, the public and society. One of the more audacious staged accidents happened in Newcastle in 2009 when a mini bus allegedly travelling from Newcastle to Edinburgh for a stag-event was supposed to have caused a collision with another car in a tunnel, resulting in alleged whiplash injuries to all occupants.

The scale of the injuries proportional to the supposed collision raised suspicions and further investigation by Aviva’s Special Investigations Unit and local Police was able to prove that the accident was entirely bogus.

Specifically, CCTV showed that the other vehicle involved in the accident wasn’t at the scene at all. Aviva also linked the driver and passenger of the other vehicle to the occupants of the mini bus through social media sites.

Instead of the reported collision, the mini bus had been deliberately damaged elsewhere and then taken to the scene of the incident, where debris was scattered and the accident “staged”.

As well as presenting personal injury claims worth over a total of £100,000, six ambulances also attended the scene and the party were treated at the local hospital. This is an example of the wider cost to society of injury fraud and which puts other lives at risk.

Sixteen arrests were made in total, and in May 2013 13 people received suspended sentences and community service, and modest fines of several hundred pounds. 

This was a disappointing outcome compared to the scale of the attempted fraud and the impact on public services, and serves little deterrent for the future.

Notes to editors:

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