14,000-plus fraudulent claims detected; organized fraud up 28%: Aviva U.K.

Motor injury fraud in the United Kingdom accounts for 60% of all claims fraud that Aviva detects, with the insurer reporting it identified more than 14,000 fraudulent claims worth £95 million last year.

Motor injury fraud – including bogus claims, “cash for crash” and organized fraud – continues to be the biggest problem area and now accounts for 60% of all claims fraud detected by Aviva, notes a statement Friday from the company, the leading insurer in the U.K., serving one in every four households.

Organized fraud last year ballooned 28% to £38 million, up £8 million since 2013, Aviva reports, pointing out it currently has 15,000-plus suspicious claims under investigation, 6,000 of these motor injury claims linked to known fraud rings.

“The biggest threat to customers continues to be fraudulent motor claims, which puts innocent motorists at risk of physical harm, while pushing up premiums for everyone,” says Tom Gardiner, head of fraud at Aviva.

Gardiner cites, in particular, motor whiplash claims. “Last year, Aviva paid more than £2.3 billion settling 873,000 claims. However, in the case of motor whiplash claims, we are finding that 1-in-9 claims are tainted by fraud,” he reports.

“Although Aviva has continued to invest in its ability to detect, challenge and prosecute the plague of fraudulent whiplash claims, and supports steps taken by Government to address the problem, we believe that further steps must be taken to deal with the root cause of the U.K.’s ‘cash for crash’ industry,” Gardiner argues.

The insurer is calling for changes, including “removing the cash and profit incentives from the system, such as replacing cash compensation for minor, short-term injuries with rehabilitation.”

Last year, Aviva U.K. reported that it had detected £110 million in insurance fraud in 2013, up 19% over 2012. Motor injury fraud made up 54% of the detected fraudulent claims, and more than half of those were from organized “cash for crash” claims, the insurer noted.

Aviva further reported at the time that fraud is increasingly being committed by third parties not insured by Aviva, but making claims against Aviva customers, and also by organized gangs.

But fraud is about more than claims. Beyond the 14,000 fraudulent claims in 2014, the insurer reports that it detected about 6,390 instances of motor insurance application fraud in 2014, declining the applications to keep fraudsters off the road.

Aviva notes these claims ranged from people deliberately misrepresenting their claims history, convictions and addresses on their insurance application to obtain cheap cover to organized gangs buying policies to make bogus claims. In addition, the insurer detected “ghost broking” operations, in which unauthorized people sell invalid motor insurance policies, leaving many customers out of pocket and uninsured.

“We are now screening our personal and commercial motor business at the point of sale and we are committed to protecting our brokers and innocent customers from being targeted by fraudsters and ensuring that fraudsters cannot buy Aviva products,” Gardiner says, encouraging members of the public to report scams and insurance fraud to the company’s Cheatline.

“While genuine claimants have absolutely nothing to fear, our success challenging, defending and prosecuting fraudulent whiplash claims and organized fraud – even where it is not economic – sends a clear message that if you commit fraud against our customers, then it’s increasingly likely that we will catch you and prosecute you,” Gardiner cautions.