Fraud on the rise as cost of living bites

The head of counter fraud at the commercial arm of insurance group Allianz has warned that fraud is on the rise and the company reported an uptick in the amount of fraud it detected in 2023.

Allianz Commercial revealed its 2023 fraud results, in which it detected £77.4m worth of claims fraud last year – up from £70.7m in 2022 – with application fraud savings of £1.95m.  It warned the current cost-of-living crisis is having a continued impact on businesses with the financial struggle leading to an increased insurance fraud threat.

Claims fraud detection overall has increased by 10% from the prior year with the use of the Allianz machine learning tool, Incognito, boosting detection rates alongside the dedicated work of the claims validation teams.

Key trends include a marked increase in the attempted use of false Confirmed Claims Experience (CCE’s), the commercial equivalent of a no-claims bonus, which shows a potential link to ID theft of genuine companies. While 2022 saw a reduction of ‘crash for cash’ motor accidents, this trend was reversed in 2023 with a 25% increase in referrals.

Other trends in motor fraud include a continuous issue with mopeds and couriers inducing and fabricating incidents. Allianz has also identified similar accidents with pedal cycles and pedestrians which could be linked to the changes in the Highway Code.

In the Casualty space, the rise in professional enabler led fraud continues and within the property arena Allianz recorded a 41% increase in investigations relating to deliberate non-disclosure compared to 2022. This included policyholders falsifying previous claims history and not disclosing criminal convictions or directorships of liquidated companies.

James Burge, head of counter fraud, Allianz Commercial commented: “We have seen an uptick across the board on all aspects of insurance fraud in 2023. Our success in detection and preventive measures lies in the superb collaboration across our teams, with effective strategies and support from our suppliers and leadership teams. We remain focussed on fraud detection to protect our honest customers in 2024.”

The report comes weeks after the City of London Police’s Insurance Fraud Enforcement Department (IFED) urged the public to know the risks associated with committing insurance fraud, after reported cases of opportunistic fraud from March 2022 to April 2023 rose by 61% from the previous 12 months.

IFED explained opportunistic insurance fraud occurs when somebody spots a chance in their everyday life to exaggerate a claim for financial gain or provide false information when applying for insurance. Examples include faking an injury following a genuine road traffic accident or claiming twice on insurance after losing an item of jewellery.

Motor insurance fraud was the most common type of opportunistic fraud referred to IFED from March 2022 to April 2023, accounting for 51 per cent of the cases the unit received. Property insurance fraud was the second highest and made up 29 per cent of cases received.

With the cost of living crisis creating financial pressure for people across the country, IFED believes that increased numbers of otherwise law-abiding citizens are turning to insurance fraud as a way to ease financial hardships.

Detective chief inspector Tom Hill, from the Insurance Fraud Enforcement Department (IFED) at City of London Police, said: “We understand that the rising cost of living has presented challenges for many people across the country – but turning to crime to make some quick cash is never the answer.

“Committing insurance fraud can leave you with a criminal record and have long and serious consequences such as criminal prosecution and a prison sentence.

“At the very least, it can make it harder to get insurance in the future. Offenders can be placed on the Insurance Fraud Register, run by the Insurance Fraud Bureau, which can prevent them from accessing essential insurance services for several years.”

In the Casualty space, the rise in professional enabler led fraud continues and within the property arena Allianz recorded a 41% increase in investigations relating to deliberate non-disclosure compared to 2022. This included policyholders falsifying previous claims history and not disclosing criminal convictions or directorships of liquidated companies.

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