ABI publishes insurance fraud report

ABI-commissioned research published today sheds further light on the motivations of insurance fraudsters.

The research study, carried out by Perpetuity Research led by Professor of Criminology Martin Gill, will help insurers develop and refine their fraud prevention and detection practices and controls to further protect honest customers.

The report analysed previous research, and is based on interviews with a number of insurance fraudsters to gain insight into their motivations, perceptions of risk and the consequences.

The key findings show that many opportunistic fraudsters commit fraud with little thought or planning so often make mistakes. They rarely considered the longer-term consequences, and would have been less likely to have committed fraud had they been aware of the severe consequences.

As well as this, opportunists often make mistakes which can be spotted by well- trained, vigilant insurer staff, and are now more likely than ever to get caught. Organised fraudsters also often exploit public ignorance, such as ‘ghost broking’ scams. They will look for weaknesses in insurers’ fraud defences.

Professor Martin Gill said, ‘Offenders’ accounts of why and how they committed insurance frauds has reminded us of the importance of raising awareness that those who commit such frauds often get caught and the consequences are far greater than they realised. From the other side we learn that we need to raise public awareness about those who plan their scams and dupe the public; if in doubt check, and if your insurance quote looks too good to be true then it may be just that.’

Commenting on the findings, Mark Allen, manager, fraud and financial crime at the ABI, said, ‘This report provides a valuable insight into what makes insurance fraudsters tick, and will help insurers ensure that their practices and controls remain effective in deterring and detecting the cheats for the benefit of honest customers.

‘While it is pleasing that fraudsters are aware of insurance initiatives to tackle the problem, the report signals that the industry must redouble its message around the severe and long-lasting consequences of being caught committing insurance fraud. These include not only getting a criminal record, and a possible custodial sentence, but the adverse impact on family relationships, future job prospects and accessing vital financial services such as mortgages and loans.’

Detective chief superintendent Dave Clark, who is head of the City of London Police economic crime directorate and oversees the Insurance Fraud Enforcement Department (IFED), said, ‘Since IFED was established in 2012 the insurance industry and the City of London Police, which is the National Policing Lead for Fraud, has together taken significant strides forward in both the detection and prosecution of both opportunistic and organised fraudsters.

‘However, if we are really going to get to grips with this criminality we need to have a deeper understanding of exactly why people are committing insurance fraud. The evidence base gathered in this report will help us do just that, taking us inside the criminal mind which in turn will enable IFED and industry to strengthen the prevention mechanisms that are a key part of our overall strategy to reducing the scale and impact of insurance fraud across the UK.’
For the full report, please click here: