January 25 2015 Latest news:
Ben Woods, Business writer
Wednesday, April 23, 2014
Aviva has reported a 19pc year-on-year increase in fraudulent claims, which it says is being driven by organised gangs and a “lack of effective deterrents”.
The EDP Top100 firm said it uncovered more than £110m-worth of motor insurance fraud last year, marking a 19pc increase compared with 2012, with the bulk of bogus claims being due to motor insurance fraud.
Motor injury fraud makes up over half (54pc) of Aviva’s total detected claims fraud costs and the insurer said that much of this is down to organised gangs making “crash for cash claims”, where criminals deliberately stage an accident, sometimes by slamming on their brakes so that an unsuspecting motorist drives into the back of them.
Aviva said it is currently investigating 5,500 suspicious injury claims linked to “known” fraud rings, representing an increase of 20pc since 2012.
It comes as Norwich insurance services Validus–IVC reported earlier this week that its anti-fraud search engine AskLudo had identified £20m worth of erroneous or fraudulent credit hire claims since it was created four years ago.
Tom Gardiner, head of fraud at Aviva, said according to industry estimates, fraud adds around £50 to the cost of everyone’s insurance premium.
He said: “A combination of factors including the economic climate, social attitudes toward insurance fraud as a ‘victimless crime’, and a lack of effective deterrents are increasing the frequency of insurance fraud. The good news is that we are constantly improving our ability to prevent and detect fraud.”
Mr Gardiner continued: “We are witnessing a trend toward third party, injury and organised fraud. For example, in 2013, we identified fraud in one in nine third party injury claims.”
Aviva said that last year, it settled more than 910,000 claims worth £2.65bn and fraud was identified on less than 1.9pc of claims it received.
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Aviva will embark on a cost-cutting drive leading to 1,500 job losses if its £5.6bn takeover of Friends Life wins the backing of shareholders.