Major new crackdown on insurance fraud
The Home Office has announced new insurance fraud charter to step up efforts to crack down on fraudsters seeking to manipulate the UK insurance market with bogus claims and duping innocent people into buying fake insurance policies.
In 2023 alone, 84,400 fraudulent claims worth £1.1 billion were detected by the Association of British Insurers (ABI), a 16 per cent increase in the number of detected claims compared to the previous year.
Under the charter, the National Crime Agency’s (NCA) National Assessment Centre will carry out a review into the role of professional enablers in the insurance sector – where someone provides false evidence to support a bogus insurance claim.
This includes ‘crash for cash scams, which the Home Office says are “becoming a significant issue”. This sees fraudsters orchestrate accidents to put forward an insurance claim, putting innocent lives at risk. Fraudsters may also make claims for accidents that never happened.
The Insurance Fraud Bureau is currently investigating more than 6,000 suspected fraudulent motor insurance claims, which could be linked to crash for cash scams. In total, this is estimated to be worth more than £70 million in potential fraud.
The new voluntary charter, announced at the latest Joint Fraud Taskforce meeting, is designed to identify loopholes in the insurance market, enhance collaboration and criminal justice outcomes, better understand the scale of the problem and improve victim support.
This includes identifying policies being exploited by ‘illegal insurance intermediaries’ – someone pretending to be a broker or selling completely fake insurance to customers – and strengthening data security measures to stop insurance fraudsters using customer details to target people
The tactics and websites being used by fraudsters to promote bogus insurance offers will also be reviewed – this includes looking at the vulnerable victims’ notifications process, which has proven successful in the banking sector, to better identify and support victims of insurance fraud.
City of London Police T/Assistant Commissioner Nik Adams said: “As the national lead force for fraud, we welcome the launch of this charter. Insurance fraud is not a victimless crime.
“It increases the cost of premiums for honest customers, while fraudsters who sell fake car insurance or deliberately cause road traffic collisions to claim compensation put motorists at risk.
“The Insurance Fraud Enforcement Department, a partnership between law enforcement and industry, is at the forefront of tackling this crime.
“This charter is another step forward in establishing a whole system approach to combatting fraud, as it is a commitment from organisations across the insurance sector to join law enforcement in tackling key threats, enhancing criminal justice outcomes and improving victim support.”
Lord David Hanson, Minister of State at the Home Office with responsibility for fraud, said it was “an appalling crime” and they are determined to crack down on these callous criminals.
“Not only do honest customers face higher insurance premiums but these fraudsters do not care if people are harmed in the pursuit of profit,” he said.
“This charter is an important step, and we will continue to work with industry and law enforcement to better protect the public from fraud.”
Hannah Gurga, ABI Director General, added: “Insurance fraud remains an ongoing threat that corrodes trust in society and undermines our economic prosperity.
“Tackling insurance fraud is an industry priority, and requires a collaborative approach between private and public sector.
“We’re delighted to have agreed the Insurance Sector Fraud Charter with the Home Office, boosting the industry’s resilience and ability to fight fraud.
“We look forward to continuing to work with the Home Office and other industry signatories to implement the charter commitments.”
The charter covers the vast majority of the insurance sector ranging from general insurance firms to underwriters and has the backing of the British Insurance Brokers’ Association, London and International Insurance Brokers’ Association, Lloyd’s of London, Lloyd’s Market Association and the International Underwriting Association, alongside ABI.
According to the latest ONS Crime Survey Statistics, fraud is most common crime in England and Wales and one in 16 adults experienced fraud in the 12 months to the end of June 2024.