Aviva reveals huge spike in car insurance fraud

Aviva reported a 39% increase in the number of claims declined as a result of fraud in 2023, uncovering more than 11,000 suspect claims worth £116m – the equivalent of 30 bogus claims a day with a value of £318,000.

The company says it’s investigating a further 13,100 claims for suspected fraud. Fraudulent motor insurance claims for injury and vehicle damage represented the majority of detected fraud, accounting for two out of three (66%) suspect claims.

Motor injury fraud remains the most popular target for fraudsters, accounting for 35% of all bogus claims Aviva detected. The number of fraudulent injury claims declined for suspected fraud grew by 19% and was worth more than £23m – £6m of which came from declined crash for cash claims.

A large proportion of the injury claims Aviva declined for fraud are opportunistic claims brought by third parties (not Aviva customers) – for example, an exaggerated injury claim stemming from a low-speed accident, such as a shunt in a car park. Aviva defended more than 400 such fraudulent or exaggerated bodily injury claims at trial to limit the impact that these claims can have on customers’ motor premiums.

Fraudulent claims for motor damage rocketed by 123%, as third parties sought to exaggerate and inflate the cost of repair and credit hire claims. As highlighted by Aviva in 2022, organised whiplash fraudsters have refocused their efforts on the repair aspects of a motor claim, including credit hire and repair. Aviva has witnessed particular growth in motor damage fraud after the Whiplash Reforms came into effect in 2021, signaling a shift in focus for organised fraudsters.

Though not technically fraud, the use of ‘spoof ads’ on internet search engines by a small number of unscrupulous claims and accident management companies (CMC / AMC) continues to mislead customers into thinking they are contacting their motor insurer to claim for an accident they’ve had.

The trouble arises when the at-fault insurer challenges the inflated costs presented by the CMC or AMC. The claims company will then pressure the customer into paying, as they will have signed contracts obliging them to pay if the repair, credit hire and other costs can’t be recovered. These costs are frequently in the tens of thousands of pounds. Although this would normally be covered as part of the customer’s insurance policy, because the customer inadvertently (and often unknowingly) claimed via a CMC or AMC, the insurer is both unaware of the claim and unable to help the customer.

To protect customers from the effects of fraud, Aviva continues to invest in its detection capabilities. This has seen Aviva double the number of employees dedicated to investigating fraud, as well as delivering more than 6,000 hours of counter-fraud training for its people.

Aviva identified fraud on more than 51,000 motor policy applications, up 64% on 2022 policy fraud detection figures. The sharp increase reflects the continual training and investment that Aviva has made in its policy fraud detection capabilities. By keeping known fraudsters off its books, Aviva is able to protect customers from the worst effects of policy fraud, ensuring its genuine customers don’t pay for the actions of fraudsters.

These figures also include policies sold by unregulated third parties, known as ‘ghost brokers’. Ghost brokers act as an insurance intermediary and purchase insurance policies using false or misleading information about the customer to acquire cheaper insurance. Ghost brokers will then frequently alter the insurance ‘policy’ before sharing with their ‘customer’ to show ‘proof’ of their insurance purchase. However, the insurance policy is all but worthless, as the ghost broker obtains the policy through lying and misrepresenting the identity and/or nature of the risk being insured (such as address, age of driver, etc.). 

The result is that the ‘policyholder’ directly compensates the fraudster for a worthless policy, meaning they are driving without valid insurance which is not only illegal, but also carries all of the associated risks of driving uninsured.

The next largest area for fraudulent claims is in liability, such as bogus slips and trips. Fraudulent claims for liability represent 23% of all fraudulent claims detected by Aviva. Despite the number of fraudulent liability claims remaining flat, the value of these claims has grown by 9% year-on-year, highlighting the importance of detection in this area.

Household fraud accounted for 6% of detected fraud and was primarily comprised of claims for valuable items. The most popular items that were fraudulently claimed for were:

  1. Jewellery/rings
  2. Mobile phones
  3. TV’s
  4. Laptops
  5. Tablets

Pete Ward, Head of Claims Counter Fraud at Aviva, said, “We’re here to help our customers when something’s gone wrong, settling their claim quickly and fairly. But where we detect fraud, we will vigorously defend fraudulent or inflated claims and, where appropriate, prosecute those who target Aviva.

“That’s why we’ve invested in the tools, technology and people necessary to create a robust counter-fraud capability, helping to ensure the cost of insurance fraud is not passed onto our customers. This investment has improved our ability to detect fraud across all lines of business and has contributed to the steep rise in the number of fraudulent claims we detected last year – particularly in motor, where exaggerated claims for damage have rocketed.

“Last year also saw Aviva, working with IFED, secure the industry’s first Serious Crime Prevention Order against Hamed Sediqi, who repeatedly targeted Aviva in an organised motor fraud campaign. This is a landmark result against a serial fraudster which will not only protect Aviva and its customers from being targeted, but should also act as a wake-up call to other professional fraudsters about the consequences of their actions. Combined with our recent successful application of the Proceeds of Crime Act, Aviva continues not only to detect fraud, but also create powerful deterrents against committing insurance fraud in the first place.”

Photo by Yeka.UK on Unsplash

AUTHOR

Stuart O'Brien

All stories by: Stuart O'Brien