The cost-of-living crisis has led families across the country to examine where they can cut expenditure.
Insurance, whether it be for a car, pet or home, is among life’s necessities – but fraudulent claims and organised insurance crime are becoming increasingly prevalent, encompassing everything from bad-faith claims to scams.
More people in the UK are being exposed to fraud, a trend that accelerated during the Covid-19 pandemic. According to a recent survey by the credit agency TransUnion, 73 per cent of respondents said they had been targeted by scammers in the previous three months, as the cost of living rises. Meanwhile, UK insurer Aviva uncovered more than 11,000 instances of claims fraud last year, worth £122m.
Instances of “ghost broking”, where fraudsters masquerade as insurance intermediaries and purchase insurance policies for victims using falsified information (only to then quickly cancel the contract, leaving people uninsured) is likely to increase as people search for cheaper deals. This appears to be a common practice in car insurance in particular: Aviva reported ghost broking accounted for 15 per cent of the 20,000-plus motor policy applications in which it identified fraud in 2021.
Comprising 60 per cent of all fraudulent claims, motor-related insurance continues to be the preferred area for scammers to operate in, according to Aviva’s data.
The UK’s Financial Conduct Authority (FCA) has warned that financial crime will become “even more prolific” as living costs increase. In September, Sarah Pritchard, the FCA’s executive director, warned of the “complex and ever-evolving enemy” scammers had become. “They will adapt to exploit new weaknesses in the financial system,” said Pritchard, “and they will constantly vary their tactics when targeting the vulnerable for fraud.”
A full version and illustration of rising insurance fraud is featured in the latest Spotlight supplement: Risk and Resilience: Shoring up the economy, which can you donwnload the pdf of here.