Government and insurers bring forward all-new Insurance Fraud Charter

Last year alone, 84,400 fraudulent claims worth circa £1.1 billion were detected by the Association of British Insurers (ABI). That represents a 16% increase in terms of the number of detected claims when compared to the prior 12 months.

The Insurance Fraud Bureau is currently investigating upwards of 6,000 suspected fraudulent motor insurance claims, which could be linked to ‘crash for cash’ scams. In total, this is estimated to be worth over £70 million in potential fraud.

The new voluntary Insurance Fraud Charter is designed to identify loopholes in the insurance market, enhance collaboration and criminal justice outcomes, better understand the scale of the problem and improve victim support.  

Pledges include the following:

*the National Crime Agency’s National Assessment Centre is carrying out a review into the role of professional enablers in the insurance sector (whereby someone provides false evidence to support a bogus insurance claim)

*identifying policies being exploited by ‘illegal insurance intermediaries’ (ie someone pretending to be a broker or selling completely fake insurance to customers)

*strengthening data security measures to stop insurance fraudsters from using customer details to target specific individuals 

*reviewing the tactics and websites being used by fraudsters to promote bogus insurance offers (this includes looking at the vulnerable victims’ notifications process, which has proven successful in the banking sector, in order to better identify and support the victims of insurance fraud)

Appalling form of crime

Lord David Hanson, Minister of State at the Home Office with responsibility for fraud, explained: “Fraud is an appalling crime. We’re determined to crack down on these callous criminals. Not only do honest customers face higher insurance premiums as a result of such dishonesty, but these fraudsters do not care if people are harmed in the pursuit of profit.”  

Lord Hanson added: “This new Insurance Fraud Charter is an important step forward as we continue to work with industry and law enforcement to better protect the public from fraudsters.”

Hannah Gurga, director general at the ABI, commented: “Insurance fraud remains an ongoing threat that corrodes trust in society and undermines our economic prosperity. Tackling such fraud is an industry priority and requires a collaborative approach between the private and public sectors.”

Gurga continued: “We’re delighted to have agreed the Insurance Fraud Charter with the Home Office, which will boost the industry’s resilience and ability to fight fraud. We look forward to continuing to work with the Home Office and other industry signatories to implement the new Charter’s commitments.”

Temporary Assistant Commissioner Nik Adams from the City of London Police observed: “As the national lead force for fraud, we welcome the launch of this new Charter. Insurance fraud is not a victimless crime. It increases the cost of premiums for honest customers, while those fraudsters who sell fake car insurance or deliberately cause road traffic collisions to claim compensation put motorists at risk.”

‘Whole system’ approach

The Insurance Fraud Enforcement Department, itself a partnership between law enforcement and industry, is at the forefront of tackling this crime.

This Insurance Fraud Charter is another step forward in establishing a ‘whole system’-style approach towards combating fraud as it’s a commitment from organisations across the insurance sector to join law enforcement in tackling key threats, enhancing criminal justice outcomes and improving victim support.

The Charter itself covers the clear majority of the insurance sector ranging from general insurance firms through to underwriters and has the backing of the British Insurance Brokers’ Association, the London and International Insurance Brokers’ Association, Lloyd’s of London, the Lloyd’s Market Association and the International Underwriting Association alongside the ABI.

According to the latest Crime Survey statistics issued by the Office for National Statistics, fraud is the most common form of crime in England and Wales.

One in every 16 adults experienced fraud in the twelve months leading up to the end of June 2024.