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Insurance fraud leaps, but it might be a good thing!

16 September 2016 11:29:02

Why might the ABI's reported surge in fraud be good for us? image
Why might the ABI's reported surge in fraud be good for us?

Getting a good deal on insurance seems to be something of a competitive sport to the British (as every other advert on TV seemingly testifies to). But, although savvy UK shoppers continue to painstakingly compare insurance products to get the cheapest deal, fraudsters and criminals are undermining those efforts and pushing up prices for everyone.

Indeed, new figures released by the Association of British Insurers (ABI) show an increase of 6% in cases of detected fraud, to around 130,000 in 2015.

Nevertheless, despite the increase, it is not the usual suspect claims that seem to be fueling the rise in fraud. Car insurance fraud, which was once plagued by bogus whiplash claims, saw the value of fraudulent payments drop by astonishing 10%, as better detection rates deterred would-be perpetrators.

So what did fuel the increase in fraud?

By far and away the biggest driver of increased insurance fraud has been a surge in the number of liability claims. Detected rates of personal injury fraud (Slips, trips and falls) increased by a whopping 36%, as "no win, no fee" lawyers continue to trawl for plaintiffs before proposed changes aimed at tackling the UK's growing "compensation culture" are enacted by the UK government.

However, despite the increase in fraud, it is not all bad news for the UK shopper. In fact, a sharper focus by insurance companies on fraud could well be driving the reported increase, as their detection rates increase. This should should pay dividends in the future, and some evidence certainly supports this view, as the overall value of fraud detected has in-fact decreased.

So does this mean we can all expect cheaper car and home insurance? Not just yet - It still pays to shop around. But, as in-car cameras, driverless cars and other technologies increase, we can expect that in the near future our insurance premiums are much leaner than they are right now.

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