Motor insurance policy fraud cases jump as households squeezed by living costs

The number of fraudulent motor insurance applications being detected has jumped by 16% since last year, according to data from a major insurer.

Aviva blocked more than 23,300 fraudulent or suspect motor insurance applications during the first 10 months of 2022, compared with just over 20,000 at the same point last year.

The insurer is warning motorists to think twice if they are tempted to lie in an attempt to save money on their policy, as households feel the pressure from surging living costs.

Aviva said the majority of bogus applications it detects are from applicants who change key information about themselves or their driving history, in an attempt to secure cheaper cover.

This could include claiming a car is kept in a garage overnight even though the customer does not have a garage, or changing the driver’s age, or how long they have held their licence for, how many penalty points they have, or their occupation.

Another common fraud is “fronting”, which happens when a motorist claims to be the main driver on a policy when they are not – for example, a parent fronting a policy for their child, who in reality is the main driver of the vehicle.

Aviva recommends that parents who are looking for insurance for their children should try a telematics or connected car policy to get a more affordable insurance premium suitable for young drivers.

Iain Hamilton, head of motor underwriting at Aviva, said: “The overwhelming majority of our customers are honest, and we have a duty to make sure that we do everything we can to minimise the impact of fraud on their motor insurance premiums.

“But the increase in attempted application fraud shows that insurers cannot be complacent, and must do everything we can to reduce the impact of fraud on premiums for our customers.

“One of the key ways we can do this is to educate motorists about various forms of application fraud so that they are aware of ghost brokers offering cheap but worthless insurance, while also ensuring that they fill out their insurance application as accurately as possible so they have the right cover for their needs.

“If motorists are in any doubt about their insurance, they should speak with their insurer or broker to confirm they are adequately covered.”

Aviva said ghost broking accounts for 15% of policy fraud it detects.

Ghost brokers appear to offer cheap cover but they put false details on policies to artificially reduce the price. Often, it is only when someone tries to make a claim that they realise the policy is worthless.

Buying a bogus policy through a ghost broker can have serious consequences, including police seizing the car, a fixed penalty notice, and being liable for any damage caused while driving without valid insurance, Aviva warned.

As pressure mounts over the cost of living, motor insurance customers should be wary of insurance offers from unclear, unsolicited or unusual sources, particularly online messaging platforms, the insurer said.

If customers have any concerns about the legitimacy of an insurance offer, they can check the broker’s status on the websites of the Financial Conduct Authority or the British Insurance Brokers’ Association.

They could also try contacting the insurer directly.

Mr Hamilton said: “When it comes to applying for insurance, honesty really is the best policy.

“Motorists should avoid the temptation to change their details in attempt to save a few pounds, as the penalties for policy fraud can be costly and add pressure to motor insurance premiums for all motorists.”