Fraudulent claims at record high

A STUDY carried out by Ordnance Survey revealed that 74% of the UK's leading insurance fraud investigators have seen an increase in fraudulent claims since the beginning of 2009, and the problem shows no sign of abating. In fact, 80% of respondents predicted the situation will get worse in the next 12 months, with the credit crunch fuelling fraudulent claims.

Bogus claims have risen, with over half - 57% - of fraud investigators surveyed reporting an increase; 54% have seen inflated claims. The areas cited as most affected are: motor insurance (34%); travel (17%); and household (15%).

According to Sarah Adams, insurance and banking sector manager at Ordnance Survey: "Insurance companies are not tolerating fraudulent activities and are cracking down on insurance cheats."

Mapping is now being used by three out of four fraud investigators to help highlight hot spots and reveal potentially fraudulent links, such as a suspicious pattern involving a common solicitor or doctor.

Adams added that seven out of 10 insurers also use Ordnance Survey's data as a basis to create maps. By overlaying data using in-house software, the insurers can check if, for example, houses being claimed for in a fire damage claim were already derelict.

She said: "Recent analysis using Geographic Intelligence highlighted how two seemingly unrelated postcodes with high volumes of fraudulent activity were in fact adjacent to each other. Our analysis has also uncovered the hidden spatial relationships between suspect addresses used by an organised crime gang, which would never have been identified through traditional data-mining techniques."

Mihir Pandya, fraud manager of the claims division at Allianz, said brokers are keen to act for many reasons: "A tarnished reputation could lead to financial damage. Fraud impacts on premiums and business and should not be tolerated."

Mike Boon, fraud management director at Cunningham Lindsey, said most brokers are keen to help insurers and adjusters tackle fraud and will contact the fraud departments at insurers and adjusters when a claim is suspicious.

"Insurers and adjusters can give guidance on what to look for and what to do when a claim seems suspicious. Larger brokers, especially those with claims-handling authority, benefit from a strategic approach, with defined processes and responsibilities," said Boon.

He continued: "Be prepared when something arises - a live fraudulent claim can call for a rapid response."

Peter Elliott, head of marketing at Bluefin, stressed the need to deal with issues swiftly and thoroughly. He said: "We accept our clients' claims as genuine until proven otherwise but, where fraudulent activity is identified, we would review our relationship with that client as a matter of urgency."