Insurance fraud thrives during recession
When people are desperate enough for money, they will sometimes turn to insurance fraud as a way to get money because to them, insurance fraud seems victimless. After all, what's a £5,000 claim for a giant insurance company, right? Nope. It affects everyone who buys insurance due to increased premiums.
How much has insurance fraud gone up?
In 2008, 4% of all insurance claims were found to be fraudulent, up from 3% in 2007 . The number is expected to rise in 2009 as the recession deepens.
How much does insurance fraud cost the industry, and, more importantly, me?
In 2007, fraudulent insurance claims totaled £730 million a year . Other sources estimate that the figure is more like £1.6 billion a year. Insurance fraud adds around £40 to everyone's premium.
How does organized insurance fraud work?
Organised insurance fraudsters will sometimes deliberately cause car accidents where an innocent driver is forced to crash into the back of the fraud criminal's car. The organized fraud group makes claims against the innocent driver, often for made-up injuries on people who weren't even at the scene of the crash. Some of these insurance fraud rings have claims with many insurers at the same time.
What kind of individual fraud cases show up more during recessions?
Sometimes people will torch their car and claim it was stolen in order to collect insurance money. Others will "lose" expensive jewellery that is covered in a homeowners policy, or claim that an injury suffered during recreation (playing rugby for instance) was caused by a hole in the pavement. Insurance fraud having to do with automobiles is the most costly, accounting for £360 million a year.
Why should I report suspected insurance fraud?
Well, for one thing, insurance fraud is a felony. For another, it costs you, me, and everyone else in terms of higher premiums. You can report suspected insurance fraud anonymously to the Insurance Fraud Cheatline of the Insurance Fraud Bureau.