Insurance fraud now adding £90 to your premium
If the Budget last week wasn’t bad enough- with the proposed 3.5% increase in insurance premium tax adding around £68 to every household insurance bill, new figures suggest that dishonest insurance claims are also adding a new high of £90 to every home’s premium.
A new report from the Association of British Insurers and City of London Police’s national fraud unit says that insurers claim they discovered 350 fraudulent claims each day in 2014. This is across insurance types, including car, motor and home. Car insurance was responsible for the largest proportion of fraud- with over half (67,000) of the 130,000 claims made, with these being worth £835m in total. Personal liability claims were second, worth £330m.
However, some suggest that this is a mere fraction of the insurance fraud out there, and that most people are actually getting away with it. Stephen Gaywood, a fraud specialist at the AA, told the Telegraph " Most insurers believe this is the tip of the iceberg," adding that “those attempting to defraud their insurers are increasingly likely to get away with it, but the industry's focus on fraud needs to be stepped up."
But it could simply be the case that policyholders don’t realise they are committing fraud, for example by failing to provide the correct information when they sign up for car cover. For example, many people will include people, primarily teenagers for example, as a named driver on a vehicle when they are actually the main driver of that vehicle. This is actually classed as insurance fraud, as it is often used to generate a lower premium than the expensive driver would get if they insured in their own name, and is known as "fronting". Other ‘misdemeanor’ type insurance frauds commonly seen include using incorrect job titles or saying a car is kept in a garage, when generally you can’t be bothered to actually open the door and it stays on the driveway.
However, in view of the increasing number of fraudulent claims, the insurance industry is apparently determined to begin clamping down on all types of fraud. A spokesman from the ABI said that from now on, regardless of whether people are " are making a dishonest claim or lying when applying for cover to get a cheaper premium, insurance cheats are more likely to get caught than ever before."