Average insurance fraud claims rise to £12,000, ABI finds

ABI’s figures found that fraud detection rates increased by up to 0.02% for the number of detected fraud cases

The value of the average general insurance fraud claims and detection rates both increased in 2020, with the average fraud claims topping £12,000, largely due to the unprecedented challenges resulting from the pandemic.

Despite a fall in the overall number of insurance fraud cases detected in 2020, ABI’s latest figures found that both the value of the average fraud and fraud detection rates both increased compared to statistics from 2019.

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ABI’s figures found that fraud detection rates increased by up to 0.02% for the number of detected fraud cases, and by 0.47% for the overall level of fraudulent claims made.

The number of detected fraudulent claims fell by 10% in 2019 to 96,000, the lowest since 2007. The value of detected claims, at £1.1bn, also fell on the previous year at a lower rate of 4%, resulting in a rise in the value of the average fraud detected by 6% in 2019, up to £12,000.

Insurers also detected higher motor insurance fraud compared to 2019 as detection rates rose by 0.55% to 2.05% by number, and by value up 1.31% to 6%.

Mark Allen, ABI’s chief fraud and financial crime officer said: “Reflecting significantly fewer motor insurance claims last year during the lockdowns, it is no surprise to see a fall in detected frauds last year. Also having an impact have been the various support schemes from the government to help individuals and firms cope with the financial hardship which can ordinarily lead to increased insurance fraud.”

Ben Fletcher, director of the Insurance Fraud Bureau (IFB), said: “The pandemic has brought unprecedented challenges for the counter-fraud sector, but thanks to the industry’s collaborative efforts insurance fraud has been prevented from rising as much as first predicted.

“Whilst we welcome this good news, we must not be complacent. The disruption caused by COVID means many people continue to face economic hardship which sadly provides fertile ground for fraud. Not only does insurance fraud push up everyone else’s premium costs, but some scams such as deliberately caused collisions can put innocent people at serious risk of harm.”

He added: “In these challenging times, it’s essential that the public continues to be vigilant and reports evidence of insurance scams to our confidential Cheatline, so we can work with the police to keep fraud down and protect consumers.”

Detective chief inspector Edelle Michaels, head of the City of London Police’s Insurance Fraud Enforcement Department (IFED), said: “The Covid-19 pandemic reminded us how crucial collaboration across the industry and with law enforcement is in stopping insurance fraud. 

“IFED worked hard to act upon these detections, with the number of arrests executed by the unit more than doubling (124%) last year in comparison to 2019.”

He added: “We are pleased that, in spite of a number of court cases being postponed because of Covid-19, a number of audacious fraudsters were brought to justice last year following investigations by IFED supported by the industry. These results will hopefully act as a deterrent to any would-be criminals as life begins to return to normal and more opportunities to commit insurance fraud arise.”

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