Cracking down on insurance fraud “remains a top priority” asserts ABI

While the number of detected fraudulent claims has fallen slightly to 93,900 cases, which is down 2.7% on 2024, the value of fraudulent activity continued to rise sharply, thereby illustrating its growing scale and sophistication. The average value of a fraudulent claim reached £14,300 last year: the second-highest level on record and just below the peak of £14,600 recorded in 2022.

Motor insurance remains the area where insurers have identified the highest level of claims fraud, accounting for 55% of all detected cases. With 51,900 fraudulent motor claims worth £625 million uncovered during the year, the figures point towards fewer, but more costly cases, duly reflecting a shift towards higher severity fraud.

Property insurance shows a similar year-on-year pattern. The number of detected fraudulent claims fell by 6.2% to 17,700, while their total value rose by 3.4% to £201 million, bringing the average value to a record high of £11,400.

Travel recorded the sharpest increase in volume. Detected cases rose by 85% to 4,500, while the value of those cases increased by 16% to £8.6 million.

When looking at the types of fraud scammers have attempted to commit, exaggerated loss (ie when someone deliberately attempts to increase the cost of a claim beyond its true value) remains the most common, with a total of 26,900 cases identified.

Contrived incident and loss fraud witnessed the largest increase, rising by 30% to circa 5,600 cases. These scams involve fraudsters deliberately creating or otherwise staging incidents, losses or circumstances in order to make a claim.

Insurers have also prevented fraudulent insurance applications worth £1.8 billion across the last year. Application fraud occurs when information is deliberately misrepresented or withheld in order to obtain insurance cover or reduce premiums. The total number of detected application fraud cases increased significantly, rising by 24% year-on-year.

Targeting bigger payouts 

Mark Allen (head of fraud and financial crime at the ABI) noted: “Although the rate of detected insurance fraud fell slightly last year, our data shows that fraudsters are now targeting much bigger payouts. As emerging technologies such as Artificial Intelligence become more widely available, the fraudsters will continue to look for new ways in which to exploit them.”

Allen continued: “Insurance fraud pushes up costs for everyone, making it more important than ever that, as an industry, we continue to work together to detect, prevent and deter fraud across all lines. Anyone who’s considering committing insurance fraud should be under no illusion. It’s a serious form of crime with serious consequences, including a criminal conviction and imprisonment.”

Detective Chief Inspector Simon Klust (head of the Insurance Fraud Enforcement Department at the City of London Police) observed: “Insurance fraud is not a victimless crime. Those who commit this form of fraud increase the cost of premiums for honest customers.”

Klust added: “These latest figures show that, on average, more than 250 fraudulent insurance claims are detected every day. Unfortunately, this is likely to be the tip of the iceberg. It’s important for collaboration across law enforcement and industry to deepen still further. That will help with taking further steps towards increasing the detection of insurance fraud, fighting fraud in general and brining offenders to justice.”

Economic impact 

“The ABI’s latest figures highlight the fact that the economic impact of insurance fraud is growing as the fraudsters continue to evolve their tactics and exploit new opportunities,” asserted Ursula Jallow, director at the Insurance Fraud Bureau.

Jallow went on to comment: “Insurance fraud is devastating. It costs honest customers when times are already tough. Through our Insurance Fraud Bureau ‘Connected to Protect’ strategy, we’re taking every opportunity to collaborate with our members and partners across both the public and private sectors in order to protect more people from acts of fraud.”

Further, Jallow explained: “By harnessing technology and innovation, strengthening detection and disruption and raising public awareness around the signs of scams being perpetrated, we’re actively standing together in order to fight fraud at every level.”

*Further information is available online at www.abi.org.uk