Insurance Fraud

According to the Association of British Insurers, fraudulent insurance claims cost more than £2.1 billion each year. To the average consumer, this translates to an addition of £50, on top of their insurance policy premium. Thus, over several years, this figure can grow into the hundreds. Although we have covered some aspects of insurance fraud in previous posts, we will visit some other dimensions to insurance fraud that may have been missed.

What is insurance fraud?

Put simply, anything which attempts to cheat the insurance process is considered insurance. Similarly, for an insurer to knowingly deny a customer a benefit also constitutes insurance fraud. According to statistics on the UK, motor insurance fraud is the most common type of fraud and the mostly costly for consumers.

Common Types of Motor Insurance Fraud

Application Fraud

  • Failure to disclose or misrepresentation of information upon application for insurance
  • Omission of past accident or insurance claim details
  • Failure to report points on license
  • Failure to mention car modifications

Fronting

  • One of the most common types of motor insurance fraud prevalent today
  • Fronting is when the main driver of a vehicle is listed on the insurance policy as a named driver
  • Usually a person at higher risk and with a higher insurance premium is fraudulently listed as a named driver in order to reduce the insurance premium
  • Despite being a common practice, fronting constitutes insurance fraud and is illegal
  • Since it is considered insurance fraud, fronting could render your insurance policy null and void

False or Exaggerated Claims

  • This is the most common type of opportunistic insurance fraud
  • It usually involves someone who has been involved in an accident and has decided to make a claim against their insurance policy
  • In order to maximise the pay out from the insurer, the insurance fraudster may concoct or exaggerate claims of injury resulting from the accident

Insurance Fraud

Insurance fraud is an avenue used by sophisticated criminal networks to raise millions each year. However, it’s not just seasoned criminals that resort to committing insurance fraud. The Association of British Insurers (ABI) warns that often people who have never committed a crime may discover an opportunity, possibly based on a legitimate insurance claim, to defraud their insurer. The industry refers to this as opportunistic fraud, which can be committed on a range of insurance policies, such as motor, property or pet insurance. In research commissioned by the ABI, it was found that opportunistic fraud arises as a result of perceptions of fraud not being a serious crime.

Some people may argue, insurance fraudsters aren’t proper criminals. However, the consequences of committing insurance fraud are severe and grave. People found guilty of committing insurance fraud may have their future job prospects curtailed, as well as seeing a hike in their insurance premiums. Thanks to the Insurance Fraud Bureau and its Insurance Fraud Register, insurers are in an instant able to scour integrated databases before taking on new customers. As a result, people with bad insurance records will come to light immediately, when taking out a new policy.

Another view diminishing the severity of insurance fraud is that it is a largely victimless crime. Since victims of insurance fraud are covered by their insurers, and insurers rake in the cash in the millions, a few claims will hardly be noticed. Wrong. Insurance fraud is one of the biggest contributors rises in insurance policy premiums across the board. Whether they relate to motor insurance or property insurance, insurance fraud has a big impact on the premium you have to pay. Ultimately, the average consumer ends up footing the bill for insurance fraud.

Stay tuned to Insurance Finance Talk for all the latest on everything related to insurance and finance!

 

 

Evil Insurance Scam Explosion Kills Five, Murderers Sentenced to Life Imprisonment

Shortly after 7pm, on 25 February 2018, a massive explosion ripped through a shop and apartment, causing widespread destruction and panic. Leicester police declared a major incident, closing off nearby streets. At the time of the devastating explosion, Mary Ragoobar, her sons Shane and Sean and Shane’s girlfriend Leah Reek were in the flat above the shop. Shopworker Viktorija Ijevleva was also in the building at the time. All five were killed, as the devasting explosion reduced the building to rubble. Initially, police suspected that a gas leak had caused the explosion, as firefighters battled for an hour to bring the inferno under control. Other early reports, which were uncorroborated, posited that an illegal alcohol distillery caused the massive explosion which claimed the lives of five people. A joint investigation by the police and Leicestershire Fire and Rescue Service was launched immediately.

 

Shortly after the blast, three men were arrested, including the owner of the shop. Arkan Ali, 38, Hawkar Hassan, 33, and Aram Kurd, 34, were arrested on suspicion of murder and manslaughter. However, it wasn’t until the trial that the motives behind the heinous crime which ravaged an entire family came to light. A court heard that three weeks prior to the explosion, Ali, Hassan and Kurd Kurd has conspired with shopworker and one of the victims of the blast, Viktorija Ijevleva, to commit an insurance scam. An insurance policy worth £300,000 was taken out for the shop, which the defendants had sought to claim. With co-conspirator Ijevlev deemed by the gang ‘to know too much’, they had left her to die in the inferno. The court heard how the gang sought to change CCTV camera angles and carried out the plot in order to claim the £300,000 insurance. At a trial in December 2018, all three were charged with five counts of murder and conspiracy to commit fraud by false representation.

 

The Motor Insurers’ Bureau Warns of New Scam

The Motor Insurers’ Bureau has warned of fraudsters resorting to a new scam, targeting customers by claiming to be acting on behalf of the Motor Insurers’ Bureau itself. In some instances, the fraudsters have also claimed that they have obtained victims’ information from the Motor Insurance Database. The scam revolves around fraudsters claiming to be contacting the victim as a result of an accident they have been involved in. As such, they then claim that they are contacting victims in order to arrange for compensation. However, in reality, the fraudsters will only be seeking to garner personal details and any information related to accidents a victim may have actually been involved in.

Be Prepared: Motor Insurers’ Bureau Fraudsters’ Tricks

Fraudsters claiming to be acting on behalf of the Motor Insurers’ Bureau have been observed to deploy numerous tricks to dupe potential victims. Citing the name of a reputable organisation, fraudsters may claim to be investigating an accident you were involved in. Through this, they will aim to trick you into providing details of an accident you may have actually been involved in. Also, they will insist on you embellishing or falsifying information in order to increase the claim. Crucially, fraudsters will seek to obtain your bank details, to complete the payment of compensation supposedly due to you.

Take Action: Inform the Motor Insurers’ Bureau

If you receive a suspicious call, or you are concerned about being targeted by fraudsters, the MIB have advised the following:

  • Record all details of the person making contact: name and contact details
  • The name of the company they claim to be from, including the MIB
  • Your insurance details

Remember: What the Motor Insurers’ Bureau Never Does

  • The MIB does not contact members of the public unless a claim has been made
  • The MIB does not pass on or sell on insurance claim details to third parties, under any circumstance
  • The MIB will never request personal details or bank details over the phone

The Motor Insurers’ Bureau Warns of New Scam

The Motor Insurers’ Bureau has warned of fraudsters resorting to a new scam, targeting customers by claiming to be acting on behalf of the Motor Insurers’ Bureau itself. In some instances, the fraudsters have also claimed that they have obtained victims’ information from the Motor Insurance Database. The scam revolves around fraudsters claiming to be contacting the victim as a result of an accident they have been involved in. As such, they then claim that they are contacting victims in order to arrange for compensation. However, in reality, the fraudsters will only be seeking to garner personal details and any information related to accidents a victim may have actually been involved in.

Be Prepared: Motor Insurers’ Bureau Fraudsters’ Tricks

Fraudsters claiming to be acting on behalf of the Motor Insurers’ Bureau have been observed to deploy numerous tricks to dupe potential victims. Citing the name of a reputable organisation, fraudsters may claim to be investigating an accident you were involved in. Through this, they will aim to trick you into providing details of an accident you may have actually been involved in. Also, they will insist on you embellishing or falsifying information in order to increase the claim. Crucially, fraudsters will seek to obtain your bank details, to complete the payment of compensation supposedly due to you.

Take Action: Inform the Motor Insurers’ Bureau

If you receive a suspicious call, or you are concerned about being targeted by fraudsters, the MIB have advised the following:

  • Record all details of the person making contact: name and contact details
  • The name of the company they claim to be from, including the MIB
  • Your insurance details

Remember: What the Motor Insurers’ Bureau Never Does

  • The MIB does not contact members of the public unless a claim has been made
  • The MIB does not pass on or sell on insurance claim details to third parties, under any circumstance
  • The MIB will never request personal details or bank details over the phone

 

Cash Crash Insurance Fraud Scams

In a swindle that’s become all too common place, insurance fraud scammers target unwitting members of the public as part of bogus crash insurance fraud scams. Racking up an annual bill running into millions and millions of pounds, insurer’s pass on the costs of this to the average consumer. With insurance premiums already sky-high, worse for those living in expensive areas for insurance, the average consumer is made liable for footing the bill of the practice of insurance fraud. Staging fake accidents and claiming bogus injuries, car insurance fraudsters roam the streets, ready to pounce. Follow Insurance Finance Talk and avoid falling victim to this looming threat.

According to the Insurance Fraud Bureau, following considerable analysis into insurance claims, there are four scenarios commonly created by insurance fraudsters:

Slamming On

Since it is generally assumed that the trailing car is responsible for a rear-end collisions, insurance scammers will brake suddenly, forcing a trailing car to crash into their rear. Apart from vehicular damage, scammers cash in further by claiming injuries such as whiplash.

Flashing Headlights

Approaching side roads, scammers will flash a vehicle joining the lane in order to dupe them into thinking they are giving them way. Accelerating quickly, insurance fraudsters will then intentionally collide with the vehicle from the rear.

Immediate Repair

Sometimes, after the scammers have manufactured a collision, they will attempt to coerce the victim into paying for repairs. Rather than going through the route of pursuing a fraudulent insurance claim, scammers will intimidate, threaten and ultimately coerce the victim into paying cash on the spot.

Blind Spot Lurking

On motorways and major roads, would-be scammers will try to lurk in their victim’s blind spot. Accelerating quickly and swerving into the course of the victim’s travel, the scammers will force a collision, by not giving the trailing vehicle enough room to manoeuvre.

Fraudster Invents Daughter in £140,000 Bogus Insurance Scam

A prolific and serial insurance fraudster, Susan Pain, was jailed in 2018 for a bogus insurance claim worth £140,000. The scammer invented a daughter named Sophie, who she claimed was seriously injured during the 2017 Manchester Arena bombing. As a result of this fictitious daughter’s injuries, Pain claimed that she was forced to take time off work. The court heard that she had managed to claim £139,834, over the duration of the insurance scam. The callous fraudster was convicted to two years imprisonment and ordered to repay the amount she had defrauded.

Manchester Arena Bombing Scam

Following an Ariana Grande concert at the Manchester Arena, on 22 May 2017, a suicide bomber detonated an improvised explosive device killing 22 people and injuring 139 others. As a director of a firm that sold policies underwritten by AXA, Pain was an experienced insurance broker. However, her propensity for insurance fraud was uncovered with the made-up daughter. Known professionally as Susan Raufer, her former name, Pain made the fraudulent insurance claims in her own name. Yet, insurance firm AXA exposed her scam when they were unable to identify her fictitious daughter among the hundreds who suffered injuries at the Ariana Grande concert. The discovery of this scam exposed a web of lies, weaved by Pain over a seven-year period, comprising a number of insurance scams.

Fraudster Is Ordered to Repay Proceeds of Crime

The prosecution’s Christopher Hopkins argued that Pain had benefitted to the tune of £139,834 over the course of the scam. A confiscation order, targeting Pain’s house and pension, was made. With £88,134 being claimed from the value of the property and further sums to be seized from the perpetrator’s pension, when it becomes available. Under the Proceeds of Crime Applications, prosecutors are able to demand further cash, as it becomes available, regardless of the source of the income.