Myth 1: Insurance fraudsters aren’t ‘proper’ criminals.
Fact - Insurance fraud is a serious crime which can result in serious consequences for fraudsters, who may ultimately obtain a criminal conviction and even face 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 2: 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 3: 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 4: There are no serious consequences of committing insurance fraud.
Fact - Committing insurance fraud has 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.
Myth 5: I can save money on my car insurance by putting it in someone else’s name.
Fact - This is fraud! 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 6: 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 7: 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 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.
Myth 8: Nobody will find out if I make a fraudulent claim.
Fact - Insurers are committed to doing everything they can to detect, disrupt and prosecute fraudsters. They are becoming increasingly effective at sharing intelligence and information to fight fraud at every level. Advanced analytical software helps insurers proactively identify cross-industry patterns and alert the industry to fraudulent networks.