Fraudulent claims costs UK insurance industry over £1bn every year says leading motor insurance broker InsureYourMotor.com
The UK’s premier online motor insurance broker, InsureYourMotor.com estimates that one in 20 drivers are uninsured and many more than this give false information to their insurance company in an attempt to lower their premiums. Last year the insurance industry lost £1.3bn as a result of fraudulent claims and InsureYourMotor.com estimate that for every £100 motor insurers make they paid out £120. Despite the fact that insurance fraud costs more than £20 million a week, it is generally regarded as a victimless crime and, according to a recent survey, almost half the population would consider it. So sick has the insurance industry got of fraudulent and exaggerated claims, said to represent about 10% all claims, that it has now enlisted the help of the police. David Harlow is MD of the countries leading online motor insurance broker, he comments: “Be honest with your insurance company when you tell them about your driving record and history. Any convictions, previous claims, medical conditions and so on. Thanks to national computer databases, they will find you out if you are dishonest and that means trouble. Lying or withholding information is called 'nondisclosure of material fact' and is considered to be fraud. Similarly you must be honest about who owns the car and who will drive it. Adding the main driver as an occasional user or hiding behind an 'any driver' certificate to keep the premium down is dishonest and you will get yourself into trouble. I can tell you of a case where Mr X had a daughter, Miss Y. She owned a car and, to save money, Mr X insured the car in his name. Then she had an accident in it and she submitted the claim. Upon investigating the insurer found out she was the owner of the car and that Mr X did not even have a valid driving licence. If fact he could not drive at all! The car was a total loss. The policy was made 'void ab initio' - that means it never existed. She ended up with no car and no insurance”. “It is quite amazing what people will try on; there was also the case of a car owner who pushed his vehicle over a cliff to get the insurance money. His scam was foiled when a local newspaper published a picture of the smashed car at the bottom of the cliff two days before it was allegedly nicked!” The same applies to renewal. When you renew you must be as honest as when you first purchased the policy. You are, in effect, buying a new policy each time you renew. If you have had a conviction for speeding during the year you must tell them. They might offer the same renewal, they might add terms. But if you fail to tell them that is nondisclosure again and the consequences are the same as before. Astonishing findings from the Association of British Insurers survey on insurance fraud found that people who submitted false claims on insurance policies were more likely to be married male homeowners in full-time work with a higher-level education. Not as many might expect, those on lower incomes with little or no education. Over the past few years, insurers have increasingly been using technology to get on top of the problem. Some insurance companies have gone as far as introducing a voice stress analysis system, otherwise known as a lie detector machine, to measure variations in voices when people make a claim to find out if they are being economical with the truth. Others use measures such as detection software to check for multiple and suspect claims. Brokers too are taking action. The penalties for falsifying a claim are pretty severe. Apart from prosecution and prison, insurers can cancel a policy if discrepancies are found and, if this happens, it could be difficult to buy cover from the other companies. David Harlow goes on to comment: “The majority of claimants are honest. This is not about trying to get out of paying people what they are rightly owed. It is about clamping down on fraudsters who push the price up for the rest of us.”Date - 03/07/2003
