The British insurer Aviva detected over 14,000 fraudulent claims worth £95 million in 2014 – equivalent to 39 fraudulent claims worth an average of £260,000 every day. The insurer also detected more than 6,300 instances of motor insurance application fraud – highlighting that fraud is not just a claims problem.
Motor injury fraud – including bogus claims, cash for crash, and organized fraud – continues to be the biggest problem area and now accounts for 60 percent of all claims fraud detected by Aviva. Organized fraud increased 28 percent in 2014 to £38m – an increase of £8m against 2013. Aviva said that it currently has more than 15,000 suspicious claims under investigation – 6,000 of these are motor injury claims linked to known fraud rings.
Tom Gardiner, head of fraud at Aviva, said, “Our figures show that insurance fraud remains a significant and complex challenge, but the biggest threat to customers continues to be fraudulent motor claims, which puts innocent motorists at risk of physical harm, while pushing up premiums for everyone.
“While genuine claimants have absolutely nothing to fear, our success challenging, defending, and prosecuting fraudulent whiplash claims and organized fraud – even where it is not economic – sends a clear message that if you commit fraud against our customers, then it's increasingly likely that we will catch you and prosecute you.
“We are here to pay genuine claims quickly and fairly. For example, last year Aviva paid more than £2.3 billion settling 873,000 claims. However, in the case of motor whiplash claims, we are finding that 1-in-9 claims are tainted by fraud.
“Although Aviva has continued to invest in its ability to detect, challenge, and prosecute the plague of fraudulent whiplash claims, and supports steps taken by the government to address the problem, we believe that further steps must be taken to deal with the root cause of the U.K.'s 'cash for crash' industry. Changes we are calling for include removing the cash and profit incentives from the system, such as replacing cash compensation for minor, short-term injuries with rehabilitation.”
Aviva said that the fight against insurance fraud needed to move from “detection” to “prevention” – and that it has taken steps to prevent fraudsters from accessing Aviva products and targeting Aviva customers.
Aviva said that it detected more than 6,390 instances of motor insurance application fraud in 2014. This ranged from people deliberately misrepresenting their claims history, convictions, and addresses on their insurance application to obtain cheap cover, to organized gangs buying policies to make bogus claims. Aviva also has detected “ghost broking” operations – where unauthorized people sell invalid motor insurance policies, often to innocent motorists, leaving many customers out of pocket and uninsured.
Aviva said that one example of large-scale application fraud it had detected was seen in the U.K. city of Norwich, where fraudsters set up hundreds of motor policies using addresses in the city without the knowledge of the householders. Within days of the policies coming into force, Aviva said that it began receiving claims from these policies. Aviva said that it declined the fraudulent claims, cancelled the policies, and liaised with local media to alert customers and householders to the threat. In total, Aviva said, this ring generated 157 claims with an estimated value over £3m.
Mr. Gardiner continued, “The fight against fraud begins at the front door. We are now screening our personal and commercial motor business at the point of sale and we are committed to protecting our brokers and innocent customers from being targeted by fraudsters and ensuring that fraudsters cannot buy Aviva products.”
Victoria Spears
Victoria Prussen Spears is senior vice president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading New York City law firm before joining Meyerowitz Communications. She may be contacted at [email protected].