Cost of living crisis fuels 25% rise in insurance fraud
07/20/2022
Zurich UK has reported a sharp increase in insurance fraud as cost of living pressures contribute to a rise in bogus claims.
Between 1 January and 31 May, Zurich saw the number of fraudulent property claims leap by 25% compared to the same period last year. In the last five months, the insurer prevented fraud amounting to £4.2m – up from £3.3m over the same period in 2021. This equates to more than £40,000 a day.
High-value jewellery, mobile phones and TVs were among the most common items fraudsters claimed to have been lost, stolen or damaged. The average value of a fraudulent home insurance claim was £8,800.
Last year, Zurich detected more than £8.4m worth of fraudulent property claims, significantly up on the £4.7m it stopped the year before. The number of claims rejected due to fraud leapt from 394 to 473 – an increase of 20%.
Detective Chief Inspector Tom Hill, from the City of London Police’s Insurance Fraud Enforcement Department (IFED), said: “We understand that the rising cost of living has made the past few months particularly hard for many people across the country – but turning to crime is never the answer.
“Submitting a bogus insurance claim may seem like a victimless crime, but it in fact drives up the cost of premiums for everyone. As well as this, it could also land you with a criminal record. Exaggerating or fabricating a claim for a pricey watch or television may seem like a quick way to make money, but a conviction will have a lasting impact on your life.”
Scott Clayton, Head of Claims Fraud at Zurich, said: “Sadly, many more people are facing hardships as a result of the cost of living crisis, which is contributing to an increase in fraudulent claims. Since the start of the year, we’ve seen a significant rise in bogus property claims, as households and businesses come under increased financial strain.
“While exaggerating or faking a claim might seem like a chance worth taking, the consequences can be severe, with fraudsters facing criminal prosecution and potentially even a prison sentence. At the very least, offenders can expect to find it harder to obtain cover.
“Although fraud is on the up, we’re better prepared than ever to detect it. New technology is helping us to fight fraud more effectively and making it harder for scammers to evade detection, whether they are individual opportunists or organised criminal gangs.
“We’re there for our customers when they need us, and last year paid £2 billion in claims. But as well as paying valid claims, we remain vigilant against fraud.”
Zurich is increasingly employing technology as a weapon to detect fraud. The insurer has invested in new NetReveal software that uses complex algorithms and data analytics to uncover fraudsters trying to hide their identity by providing false name or address details.
The system provides a further safety net by highlighting individuals with a poor claims history, such as those who have made multiple claims.
Zurich also has a number of new fraud developments in the pipeline for 2022. Later this year, it plans to launch ‘real-time’ fraud checks at the point a claims handler enters a claim onto Zurich’s systems – helping to speed up the processing and payment of claims for customers.
Case studies – insurance fraudsters
- A cyclist aroused suspicion after making £1,000 claim for a stolen bike just 30 minutes after buying a policy. However, the wheels came off the woman’s story when mobile phone footage revealed the thief making off with the bike - 45 mins before she took out the cover.
- A DIY enthusiast foiled his own attempt to fake a £3,000 claim for the theft of his tools. Asked to provide photos of the tools, the man shared a picture of himself with the hardware, only for the date to show it was snapped after the alleged theft. The man also claimed bikes worth £2,000 had been stolen from his garden but were found by police in his shed.
- It was a case of déjà vu for one man who claimed he burned his bedroom carpet with hair straighteners, only for checks to reveal he had claimed for the same damage, using the same photos, with his previous insurer a year before.
- A £500 claim for a smashed 50 inch TV unravelled when a man sent a photo of the damage taken two days before the date he claimed the incident occurred. The man blamed his four-year-old daughter for trashing the TV in a tantrum before school – despite initially reporting the incident occurred on a Sunday.
- A high-flying poker player reported the loss of his £110,000 watch from his bag just months after doubling the value it was insured for. When investigators probed the claim, the man claimed the expensive timepiece had reappeared – in the same bag.
