Exaggeration biggest form of GI fraud
The Fraud Index revealed that three in ten (29%) claims investigated were uncovered as being potentially fraudulent saving the insurance industry £3.4m in 2013 to date.
Sally Griffiths, director at VFM, said: “Exaggeration of a claim is increasingly becoming an issue in the industry and the problem is that there are no consequences to people trying to give it a go.
“Some insurers may still pay out for the genuine part of the claim even if they have found that there was an additional camera or laptop that was fraudulently added onto the list of items stolen.
“This is the reason why we have not only seen volumes rise but also the value of the claims as more and more fraudulent items are being added onto a genuine claim.”
The multiple items category is mainly made up of people that are claiming for a theft to property or burglary and the value of these claims has risen dramatically over the past year.
16% of these types of claims investigated were rejected by the insurer or by the customer walking away because the circumstances of the loss are usually found to be genuine and only part of the claim is rejected by the insurer due to exaggeration.
The walk away rates tend to be lower because there is more money at stake and so the customer is more likely to pursue the claim which e why the overall claims values are higher, and therefore the resultant savings to the insurer.
VFM has found that as people think they can get away with claiming for additional items, and more often than not the genuine part is still paid out, not only have the volumes risen but also the claims value.
There appears to be a trend that people are increasingly trying to push their luck by claiming additional items on their genuine event and for that reason VFM introduced multiple items as its own category as part of the Index in 2012.
Griffiths added: “It’s interesting to see how external events and circumstances affect the level of fraudulent claims that we investigate.
“We know that sporting events as well as times of the year like Christmas means that people will try and get a new appliance and in order to do so without having to pay out opportunists look to their insurance to provide their new item.
“We need to ensure we are putting together a united front to promote the message that as an industry we are investigating all claims and we know when fraudulent behaviour is likely to happen.”