Value of fraudulent household content claims highest since 2004

The value of the average fraudulent household content claim in the last quarter of 2013 stood at $2,255, its highest level since records began in 2004, notes the latest counter fraud index from VFM Services Ltd.

The figures suggest people are becoming more sophisticated in their approach to fraudulent claims, VFM Services director Sally Griffiths said in a company statement Monday. VFM Services – which operates in the United Kingdom, Australia and Canada – launched a fraud training and conversation management initiative in January and works with major insurers to help them manage fraudulent insurance claims.

There is “a clear trend for fraudsters to submit slightly higher-value claims on their household policies in order to make the fraud ‘more worthwhile’ in their eyes,” Griffiths says. The peak in the value that the average fraudster is claiming on their household insurance “is largely because claims values for opportunistic fraud are historically quite low and people are realizing that any gain to be made by getting away with a fraudulent claim on their household policy is being negated by the cost of the excess on their policy,” she adds.

Index results also demonstrate an increase in claims for more financially lucrative items, such as jewellery and watches, which have a much higher average claim value than iPhones and laptops. That said, VFM Services notes that televisions and mobile phones are still a high-risk commodity, particularly during high-risk periods such as during the 2014 Olympic and Paralympic Games and Canada Games in 2015.

“We expect to see fraudulent claims peak over these high-risk periods, as people want to get their hands on the latest models in order to keep track of their favourite sporting events,” Griffiths notes.

VFM Services handled 1,477 suspected fraudulent iPhone claims in the U.K. in 2013 and 2,294 suspected fraudulent claims for televisions, with a nil settlement rate of 42%, a pattern that is likely to be replicated in Canada, the company statement adds.