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8 myths about insurance fraud busted

Myth: Insurance fraudsters aren’t ‘proper’ criminals.

Fact - Insurance fraud is a serious crime which can result in serious consequences for fraudsters who may find their future job prospects impacted, find it harder to obtain insurance and other vital financial services, obtain a criminal conviction and even face the prospect of imprisonment. Insurance fraud is often used to fund the wider activities of criminal gangs which may be linked to serious organised crime such as drug dealing, burglary or terrorism.

Myth: Insurance fraud doesn’t harm anyone.

Fact - Insurers incur costs in investigating suspected frauds, which also impacts on their ability to deal with genuine claims quickly. For honest customers, this leads to higher premiums. Insurance fraud is also known to fund and facilitate other serious crime such as money laundering and in some cases, such as staged motor crashes, puts people’s lives at risk.

Myth: Insurance fraud is easy to commit.

Fact - Tackling insurance fraud remains a strategic priority for the insurance industry and insurers continue to strengthen their systems and controls against all types of fraud. Opportunistic fraudsters, who do not consider the risk factors and concerns about getting caught, often suffer additional consequences beyond the sentence they receive, including an adverse family reaction, financial consequences and the stigma involved in being categorised as an offender.

Myth: There are no serious consequences of committing insurance fraud.

Fact - Committing insurance fraud will have long and serious consequences. Fraudsters could face criminal prosecution and a prison sentence. At the very least, they can expect to find it harder to get, and pay more for, insurance in the future. Known fraudsters may also find it more difficult to obtain credit and other financial products in the future.

Myth: I can save money on my car insurance by putting it in someone else’s name.

Fact - If you falsely declare a ‘named driver’ as the ‘main driver’ to bring the premium down because they are a lower-risk driver than you, you are committing a type of fraud known as ‘fronting’.

Myth: The police won’t act on insurance fraud.

Fact - In the UK, a specialist police unit has been established to tackle insurance fraud. The Insurance Fraud Enforcement Department (IFED) is funded by the Association of British Insurers and Lloyd’s of London and is committed to make the country a hostile environment for people who commit insurance fraud.

Myth: Nobody will find out if I lie on my application form.

Fact - If you fail to disclose or misrepresent information at the application stage, this is considered insurance fraud. Even just making a few ‘tweaks’, such as saying your car is kept on a driveway when it is actually kept on the road, could be enough to invalidate your policy. If this comes to light when you make a claim, you could find that the pay-out is restricted or that your policy is declared void.

Myth: Nobody will find out if I make a fraudulent claim.

Fact - Responsible insurers are committed to doing everything they can to detect, disrupt and prosecute anyone attempting to fabricate a claim. Insurers are becoming increasingly effective at sharing intelligence and information to fight and prosecute fraud at any level. Advanced analytical software helps insurers proactively identify cross-industry patterns and alert the industry to fraudulent networks.