New data from Legal & General reveals that over two-thirds of insurance industry intermediaries (69%) think that fraud is getting worse. The FraudStoppers Report found that many brokers and advisers feel that little is being done to deter fraudsters, with more than half (57%) confident that a customer could get away with an inflated claim.
Yet at the same time nearly three-quarters (73%) confess that they have no processes in place to help identify and prevent home insurance fraud. Many of those surveyed who did have processes in place mentioned that these included checking previous insurance cover records and claims history, as well as stressing the importance of educating their clients on what constitutes home insurance fraud and the implications of making a fraudulent claim.
The overwhelming majority of insurance intermediaries are not aware how much the cost of fraud adds to the average home insurance premium. According to the research, fewer than one in ten insurance intermediaries correctly identified how much fraud adds to the average home insurance premium, with 84% underestimating the impact.
These worrying findings are compounded by consumer data that shows a significant section of the British public think that it is acceptable to commit insurance fraud. Consumer research also conducted for the FraudStoppers Report found that nearly a third of Brits (29%) think it is acceptable to exaggerate a home insurance claim, for example adding extra items or increasing the value of the amount being claimed.
Insurance fraud adds an extra £44 to the average UK household’s annual insurance bill. Last year, over 2,000 dishonest insurance claims worth more than £16 million were detected every week across the insurance industry. The value of these claims, at £840 million, rose by 14% on the previous year.
Steve Phillips, Head of Fraud Services at Legal & General’s general insurance business, said: “Intermediaries have a vital role in helping to reduce home insurance fraud. Given the direct contact they have with their customers, brokers and advisers can contribute to improving customers’ general understanding of what constitutes insurance fraud, the implications of how it impacts them and the serious consequence for their clients if they should commit fraud.
“More people need to appreciate that fraud at any level is not a victimless crime and means additional cost to everyone’s premiums. Intermediaries can really help to reduce the level of exaggerated claims received by explaining to their customers that adding items to their claim or inflating a claim’s value is fraud.
“Legal & General has a zero-tolerance policy on fraud and our success at detecting fraud has helped to maintain premiums for customers. The FraudStoppers Report highlights how serious the problem is. We pay all valid claims as quickly as possible but we’re totally dedicated to tackling fraud, and catching the cheats. So to prevent their clients from being added to the insurance industry’s fraud databases we need to work together to stop it happening in the first place.”
Source : Legal and General Press Release
