Insurance fraud pushing up prices, says survey

Insurance fraud has soared to an estimated £1.9 billion a year in the UK, causing a knock-on effect in the form of rises in insurance premiums. This year alone the average car insurance premium jumped to above £1,000 for the first time in Great Britain, which is a 19% increase on what the average motorist was paying a year ago to insure their cars. The rise in premiums is costing the average household £44 a year in higher premiums.

Latest research suggests that it is the genuine insurance customers that are suffering from the sharply rising premiums because of the quantity of fraudulent claims being made. Part of the problem has been an accusation of the increasing amount of personal injury lawyers that could be encouraging claimants to exaggerate or lie about the extent of their injuries.

A survey carried out among lawyers has indicated that 57% had noticed an increase in the number of exaggerated claims or invented injuries from claimants in a bid to make money from their insurance companies in the past 10 years.

Law firms specialising in the investigation and handling of suspected fraudulent personal injury claims have commented that the research supports the experience within their fraud units. They worry that some types of insurance fraud are now reaching epidemic proportions. They believe it to be an ‘indirect tax on the public, levied by dishonest people’ which is unacceptable and needs to be addressed.

AA research has highlighted that despite Britain having a lower accident rate than most of Europe, it had the highest rate of people making personal injury claims. Whiplash injuries in particular are being exaggerated in order to receive as much money as possible from the insurance company. The AA has calculated that £66 of every customer’s annual premium is made up of funding personal injury claims.

Insurers have claimed that approximately £5.2million of fraudulent claims go undetected every day. This is a shockingly high 24% increase compared with research carried out two years ago.

Action is underway to prevent fraudsters and protect genuine insurance claims. Nick Starling, the Association of British Insurers director of general insurance and health, said: “There is no hiding place for insurance cheats. Honest customers should not have to pay for the fraudsters. Closer scrutiny of proposal forms and claims, as well the exchange of information through industry-wide databases, is tightening the net on the cheats.”

However, further research carried out by the ABI revealed that 16% of people would not rule out making an exaggerated insurance claim.

“The rise in fraudulent claims in the UK is shocking,” commented Paul Breen of specialist injury solicitors Serious Injury Law. “Honesty is the only policy when making a claim. Lying will only put your cover in jeopardy, and affects the people out there who genuinely need to make a claim, particularly those who have received serious injuries. They rely on their claims going through quickly and effectively. Fraudulent claims only serve to delay the process by clogging up the courts. It is a situation that we need to get to grips with as quickly as possible if genuine victims are to get the treatment and the compensation they really deserve,” he concludes.

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