Shoplifting is a crime. It is frowned upon, and those who perpetrate it are rightly vilified by every honest shopper, each of whom knows that the cost of their shopping will increase as a result. The idea of honest people shoplifting, because others do it, would be a ridiculous concept to the vast majority of people.
So why is it that nearly 40% of people think that making a false or exaggerated claim is an easy way to make a quick buck? Why is there a perception that you are unlikely to get caught? And why do some otherwise honest people view insurance fraud as a means to ‘get their money’s worth’ from the premiums they pay?
Fraud is very much alive in the insurance industry and comes in different forms. From ‘white lies’ on a proposal form or an exaggerated home insurance or whiplash claim, to organised fraud rings engaged in ‘ghost broking’ and ‘crash for cash’ scams. Last year, around £1.1 billion of fraud was detected, but that is likely to be just the tip of a very big iceberg. It is estimated at least double that amount goes undetected.
So, as an industry, we are investing £200 million a year in the fight against fraud. The Insurance Fraud Bureau, spearheading the collective fight against organised fraud, has assisted police with 829 arrests since its creation in 2006. The Insurance Fraud Enforcement Department, funded by ABI members, has made more than 350 arrests between its creation in January 2012 and September this year, including the arrest of 27 'ghost brokers' in one day in October.
People should know that the industry is serious about tackling fraud on behalf of honest customers. The development of the Insurance Fraud Register, the first industry-owned, cross-sector register of known insurance fraudsters, as well as the joint initiative between the ABI, DVLA and Motor Insurers Bureau to allow access to driver licence details from the DVLA, represent two further strong signals of the industry’s ambition to reduce fraud. And there is growing evidence that the judiciary is now taking a tougher stance, handing down more, and stiffer, custodial sentences to insurance fraudsters.
The infrastructure and the expertise are in place across the industry, and there should be no let-up in identifying, deterring and enforcing against fraudulent activity. But more needs to be done to understand why otherwise honest people commit fraud. Why do so many think it is acceptable to exaggerate a claim or, in some cases, to claim for something that has not happened?
And as an industry, we may need to do more to explain the value people get from insurance – it is there to help people manage the uncertainty that life brings – to dispel the fallacy that, somehow, you need to inflate a claim to ‘get your money’s worth’.
Changing what is, to a large extent, a cultural behaviour will take time, but it is a challenge we must accept if we are to continue making a real difference for the vast majority of our customers – honest customers who are simply fed up of paying for the dishonest activity of a significant minority.
Read Aidan Kerr's keynote speech at the Post Magazine Fraud Conference.