Cost-of-living crisis contributing to rise in fraudulent claims, say insurers

A sharp increase in fraudulent insurance claims has been recorded by an insurer as cost-of-living pressures mount.

Zurich UK said it has uncovered £4.2 million-worth of fraudulent property claims between January and May this year, equating to £40,000 per working day.

Between January 1 and May 31, Zurich saw the number of fraudulent property claims leap by 25% compared to the same period last year.

High-value jewellery, mobile phones and TVs were among the most common items fraudsters claimed to have been lost, stolen or damaged. The average value of a fraudulent home insurance claim was £8,800.

In one case highlighted by Zurich, a cyclist made a £1,000 claim for a stolen bike just 30 minutes after buying a policy. But mobile phone footage revealed the thief making off with the bike 45 minutes before the cover was taken out.

In another case, the insurer said a DIY enthusiast attempted a £3,000 claim for the theft of his tools.

Asked to provide photos of the tools, he shared a picture of himself with the hardware, but the date showed it was taken after the alleged theft.

The man also claimed bikes worth £2,000 had been stolen from his garden but were found by police in his shed, Zurich said.

Another man claimed a carpet had been burned with hair straighteners, only for checks to reveal he had claimed for the same damage, using the same photos, with his previous insurer a year before, Zurich added.

Detective Chief Inspector Tom Hill, from the City of London Police’s Insurance Fraud Enforcement Department (IFED), said: “We understand that the rising cost-of-living has made the past few months particularly hard for many people across the country – but turning to crime is never the answer.

“Submitting a bogus insurance claim may seem like a victimless crime but it, in fact, drives up the cost of premiums for everyone.

“As well as this, it could also land you with a criminal record. Exaggerating or fabricating a claim for a pricey watch or television may seem like a quick way to make money, but a conviction will have a lasting impact on your life.”

Scott Clayton, head of claims fraud at Zurich, said: “Sadly, many more people are facing hardships as a result of the cost-of-living crisis, which is contributing to an increase in fraudulent claims.

“Since the start of the year, we’ve seen a significant rise in bogus property claims, as households and businesses come under increased financial strain.

“While exaggerating or faking a claim might seem like a chance worth taking, the consequences can be severe, with fraudsters facing criminal prosecution and potentially even a prison sentence.

“At the very least, offenders can expect to find it harder to obtain cover.

“Although fraud is on the up, we’re better prepared than ever to detect it.  New technology is helping us to fight fraud more effectively and making it harder for scammers to evade detection, whether they are individual opportunists or organised criminal gangs.

“We’re there for our customers when they need us, and last year paid £2 billion in claims. But as well as paying valid claims, we remain vigilant against fraud.”

Zurich said it has invested in software that uses complex algorithms and data analytics to uncover fraudsters trying to hide their identity by providing false names or address details.

The system also highlights those with a claims history deemed to be poor, such as those who have made multiple claims.

The insurer is also building a new hub that will host all of its investigation and intelligence data to streamline investigation and intelligence management.

In May, insurer Aviva said that the proportion of insurance claims it rejected due to fraud concerns rose last year.

Aviva has also said that it expects to see more claims fraud as people come under financial stress, especially on home, small business and liability insurance policies.

Beth Mantel, senior complex crime lawyer at Reeds Solicitors, said insurance fraud can not only result in a criminal record but also, in some instances, a lengthy prison sentence.

She said: “People should be acutely aware of the dangers of committing any kind of fraud, all too often people believe that a slight exaggeration will bear no consequence but these assumptions are wrong.”