Cost of living crisis triggers a “pandemic of fraud”

The UK insurance industry is seeing fraudulent claims increase amidst the cost of living crisis, according to new data from Weightmans. 

More than half of industry professionals say they are currently seeing a significantly higher number of fraudulent insurance claims than in previous years, with 97% expecting the volume to increase further as a result of the cost of living crisis.

Mike Brown, head of Fraud at Weightmans, said the cost of living crisis and imminent recession were ”acting as a breeding ground for fraudulent claims”, both from members of the public as well as organised fraudsters. He described it as a “pandemic of fraud”. 

According to ONS data, all types of crime in England and Wales, including burglary, theft and knife crime, have fallen against March 2022 levels, with the exception of fraud, which is up by 4%.

“I believe that trend is only set to be exacerbated by the current economic turmoil people are experiencing, causing significant harm to the businesses and individuals targeted.”

Spurious claims become more sophisticated

The findings come from a survey of IFIG (Insurance Fraud Investigators Group) members, including insurers, law enforcement and regulatory bodies, who attended the Group’s most recent conference.

Fraudulent claims are becoming more sophisticated, it found, with two thirds of those surveyed saying they are seeing more complex fraudulent claims being made than in the past.

Ami Fromson, chair of IFIG, said: ““Collaboration is very much at the heart  of IFIG and with fraud on the rise, it’s essential that sector professionals across all different disciplines come together to tackle the increased fraud risks the industry is facing.

She said it was important to share data and insights on current trends. This includes an increase in fraudulent claims arising from public liability incidents, personal injury claims, high risk and potentially fabricated medical evidence, and claims layering, particularly in relation to treatment fees.

“Such exchanges of knowledge will be essential in combating fraud during this period, enabling colleagues to identify potentially fraudulent claims more quickly and accurately.”