'One in three' have committed insurance fraud

Household money

Updated on 25 May 2016 | 3 Comments

Insurance fraud is on the rise but many deem it to be a victimless crime ― here's why.

Up to one third of us have committed insurance fraud, new research has suggested.

The study, commissioned by AXA, found that more than two million people have made a fraudulent claim. However, it added that the figures understated the true scale of the problem because most people wouldn't admit to breaking the law in the first place.

A big problem is that many view insurance fraud as a victimless crime, while there is a general mistrust of insurers, AXA said. 

Half of the study’s respondents didn’t believe insurers were always honest, while a third thought that an exaggerated claim was justifiable because insurers ‘try to trick their customers with small print’.

What type of fraud are we committing?

The report highlighted the example of phone “upgrade” fraud, where someone falsely claims their device has been stolen or broken just as a new model is released. 

Similarly, the rise of "compensation culture" had triggered a sharp rise in whiplash injury claims. However, the report did criticise claims management companies for fuelling the problem, adding that they had made significant profits from personal injury claims.

In its recommendations, the report called for legal reforms such as a six-month cut-off period for bringing a compensation claim forward.

Criminal cases pushing up premiums

Figures show that fraud committed by criminal gangs is going up, with crash for cash accidents costing motorists £400 million a year in raised premiums alone.

Incidents involving workplace-related claims for things like noise-induced hearing loss or trips or slips show that, in all cases, the fraudster had no contractual relationship with the insurer, Axa said.

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