The level of claims exaggeration by would-be fraudsters has increased dramatically since last year, according to new data released by VFM.
On average, dishonest household insurance policyholders added £3,287 to their claims, a 77% increase on the last quarter of 2012 (£1,849).
The data were compiled by VFM from fraud investigations carried out on behalf of several insurers.
In a technique dubbed conversational management, VFM investigators ask for detailed information from policyholders suspected of adding extra items onto a legitimate claim, or inventing a claim entirely. After the conversation VFM says many opportunistic fraudsters withdraw their claim.
About 70% of the household claims that go through VFM’s conversation management process are passed back to the insurer’s client as genuine. One quarter are voluntarily withdrawn by the customer and 4% repudiated due to fraud or indemnity issues.
“We’re dealing with the people who pick up the phone and think it’s easy to make a claim”, said director Sally Griffiths. They think that if the opportunity presents itself they might make a fraudulent claim, for example they might have been burgled and decide to inflate their claim or add some items onto it.
We can positively influence their behaviour and make them think do I really want to tell all these lies and send in a claim with my name on it?
Griffiths said insurers are dedicating more resources to investigate lower value claims, which make up the bulk of fraudulent insurance claims. They don’t want to allow policy holders to think it’s an easy win, she said.
For multiple-item claims which were partially withdrawn or repudiated, the average fraudulent addition was 8% of the total claim submitted, VFM reported.
Since the beginning of the year £3.4m-worth of claims has been dropped by policyholders or repudiated by insurers after a conversation with VFM.
VFM Fraud Index
Ranking fraudulent claims by volume Type of claim Average claim value (Q2 2013) Average claim value (Q1 2013) Average claim value (Q4 2012)
1 Multiple items £3,287.95 £3,099.45 £1,848.99
2 Jewellery £3,016.44 £2,698.74 £2,179,70
3 TVs £534.20 £549.57 £453.78
4 Laptops £774.09 £718.08 £572.33
5 iPhones £402.45 £409.89 £394.27
1. Not understanding the different types of home insurance
The first thing to realise is that there are two, very distinct, types of …
6 Sep 2018
The Co-op Group, Britain’s most prominent mutual, is exploring the sale of its general insurance operations for about £300m amid accelerating changes …
2 Aug 2018
One year after winning an award at the National Family Business Awards, independent and family-run Ashbourne Insurance returned to the event as …
18 Jul 2018