Theincidence of insurance fraud in the UK is alarmingly high. An estimated£5.2 million worth of fraudulent insurance claims are processed and approved onany given day. These undetected financial losses have caused the average UK insurancepolicy premium to rise by £44 per month.

TheAssociation of British Insurers (ABI) has revealed that one in five peoplewould still consider submitting a fraudulent insurance claim despite the dangerof being caught. Getting caught could result in a criminal record and strugglingto obtain financial services access in the future. When the number of adultsthat own an insurance policy is taken into account, the magnitude of theproblem becomes clearly visible. According to the ABI, more than 90% of Britishadults use at least one insurance product.

Arecent insurance study reveals that up to 36,000 parents in the UKlist their children as spouses on their car insurancepolicies. This decreases their premiums, yet can effectively be prosecuted asfraud. TCF Corporate, a UKfraud solutions company, states that opportunistic retail fraud is the mostcommon type of fraud. This means that individuals exaggerate actual claims toincrease their payouts.

‘Crashfor cash’ – the practice of causing an accident in order to claim for money –is a fairy new phenomenon, but already creating quite a problem for UK insurers. A‘crash for cash’ scam typically involves two parties staging an accident inorder to claim from their insurance providers. Centenery Way in Manchesterhas been highlighted as the UK’shotspot for these types of schemes. The M65 in Lancashireis another known hotspot for this type of scam.

Accordingto UK insurance specialist Direct Line, the claims of these scams total around£350 million every year and play a huge part in the increase of honest drivers’car insurance premiums.

AboutPrudential Insurance

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