With the new threat of a cyber-attack in the next two weeks, I thought it was relevant to talk about fraudulent claims and how it is effecting the insurance industry?
According to the Daily Mail, we are about to get hit by one of the largest cyber-attacks in history apparently instructed by a Russian individual, vgeniy Mikhailovich Bogachev. With this information all over the press, i thought it would be relevant to see how this affects the insurance industry.
Facts on Cyber Crime
- In 2011/12 over one-third (37%) of adult internet users reported experiencing a negative online incident in the past 12 months, but these experiences would often be below the threshold of a recorded crime.
- Computer viruses are one of the most common negative experiences reported, although the proportion of adult internet users experiencing them appears to have declined. Experiences of hacking, on the other hand, appear to have increased
- A whopping 82% of hackers do not get caught, and a higher majority feel that they will not get caught.
- . Online shopping and auctions represent the largest proportion of cyber-enabled frauds during this time. Action Fraud received 47,980 reports of cyber-enabled fraud between January and December 2012, comprising 35 per cent of all crime and incident reports made to Action Fraud during this time
- E-commerce frauds comprises £77.3 million in direct losses (most notably, identification-related frauds, card and card-not-present frauds, and refund frauds), £16.5 million in online security measures and £111.6 million in lost revenue from online fraud prevention.
It has been well documented that most criminals like the one that is about to hit, can wipe out bank accounts instantly,it searches through your computer for any important documents it copies it,then deletes it from your system. There are lots of things in place but in the US alone 100 million pounds has been stolen, which they have not been able to retrieve due to cyber-crime.
It was reported last week that fraudulent claims were on the rise. According to ABI (Association of British Insurers) fake car crashes helped push the level of insurance fraud by £1.3bn in 2013. The figure represents an increase of 18% on the previous year. The biggest rise was in car insurance. The number of dishonest motor claims rose by 34% to 59,900 attempting to clear the industry out of a major proportion of £811m
Types of fraudulent schemes?
So-called “crash for cash” car insurance scams helped to contribute to the record figures. That is when fraudsters stage a car crash, for example by slamming their brakes on at a road junction, often having disabled the brake lights. An unsuspecting motorist then crashes into the back of the first car.
The fraudsters have witnesses on hand to show that the crash was the other driver’s fault, enabling them to make an insurance claim for the damage, as well as whiplash injuries.
Personally I have witnessed this and so have many other individuals I know. It is unfortunate as there is no way of getting around it, it is a very frustrating experience.
In one case in County Durham last year, 60 people were convicted for one of the UK’s largest “crash for cash” frauds. As many as 25 accidents were staged in the Consett area, and resulted in local residents having to pay an extra £100 on their premiums.
The Insurance Fraud Bureau is investigating 110 cases of “crash for cash” as it stands this year alone.
This doesn’t just stop at motor this all moves through to household, pet fraud and other cases.
Another example of a fraudulent claims was of a professional golfer claimed £8,000 for an injured knee, but was later filmed giving golf lessons.
The ABI said fraud was now costing each household in the UK an extra £50 a year, through increased premiums.
A vet was also jailed for trying to claim £200,000 in connection with the “treatment” of non-existent pets. However, while the value of attempted fraud went up, the number of fraudulent claims overall went down.
The ABI says the recorded level of insurance fraud is increasing because more people are reporting it and more resources are being used to fight it.
The Insurance Fraud Enforcement Department, a specialist police unit, has helped to prosecute 85 people since it was established in 2011.The industry also funds the Insurance Fraud Bureau (IFB), which was set up in 2006 to specifically tackle false motor policy claims.
Malcolm Tarling of the ABI told BBC Radio 4’s today programme insurers were getting better at detecting fraudulent claims. But he added: “Everyone pays for fraud. We estimate that across the country fraud adds £50 a year to the average family’s insurance bill – that’s £50 more than people should be paying. “This is why the industry is investing over £230m a year in tackling fraud.”
Do you have any personal fraud experiences that you would like to share?
What do you think will prevent the increase in these claims?
What are your thoughts?