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Motor insurance application fraud backfiring on motorists

Lying or deliberately not disclosing full information to a specific question when applying for motor insurance is costing dishonest motorists dear, according to figures published today by the Association of British Insurers (ABI) at its Fraud Conference.

In 2013 insurers detected 180,675 attempted fraudulent applications for motor insurance - equivalent to nearly 3,500 every week - where motorists had lied about or knowingly failed to disclose relevant  information, such as previous claims, and unspent motoring convictions, when asked. This is the first time the ABI has collected information on the extent of fraudulent motor insurance applications.

Tackling application fraud is one of the issues being discussed today, 17 September, at the ABI's Fraud Conference at which over 200 representatives from the insurance industry will debate latest developments in tackling a problem that adds on average an extra £50 to every household's annual insurance bill.   

Examples of fraudulent applications include:

  • A motorist with a poor credit rating tried to use an alias to buy motor cover.
  • An applicant failed to disclose four previous claims, and an unspent motoring conviction which had led to a 3 year prison sentence.
  • A motorist had attempted to alter his driving licence to remove driving convictions.

Aidan Kerr, ABI's Assistant Director, Head of Fraud, said:

"While insurers know that innocent mistakes and oversights happen, they are also aware that some people think that being less than honest is the way to get cheaper cover, when the way to get the best deal is to play it straight with the insurer."

"Industry initiatives, such as the Insurance Fraud Register, the Insurance Fraud Enforcement Department, and the soon to be available MyLicence initiative that will address non-disclosure of motoring offences, will make it harder than ever to deceive to try and get cheaper motor cover."

George Robbins, General Manager, Financial Crime at BAE Systems Applied Intelligence, sponsors of the fraud conference said:

"Like all forms of financial crime, motoring insurance fraud impacts on both consumers and businesses. At a time when the cost of owning and using cars is continuing to increase, fraudulent insurance applications and fraudulent claims attempts on motor policies drive up the cost of premiums. This impacts the budgets of millions of honest motorists and reduces insurers' ability to focus on good customer service.

"At the same time, the exploitation of modern technologies and new digitally-enabled techniques means that the most advanced fraudsters can perpetrate their crimes on an increasingly industrial scale. To protect both business and consumers, the insurance industry is implementing effective, timely, counter fraud measures at all stages of the process - from application to claim settlement."

Ben Fletcher, IFB Director said:

"The fact is, there are chancers who take a punt and then there are those who deliberately provide false information at the stage of applying for an insurance policy. Both undermine the underwriting process and have consequences for honest customers.  The IFB are committed to supporting the industry focusing on the deliberate and systematic fraudsters, using the vast range of data at our fingertips to help insurers take action."

Last updated 01/07/2016