Insurance fraud register launched

Posted 18/09/2012

The UK insurance industry is the largest in Europe and the third largest worldwide. According to a report published last week by the Association of British Insurers (ABI), over 2,500 fraudulent claims are detected each week, which they say costs insurers £19 million per week.

The report reveals that, contrary to the “whiplash” headlines, home insurance fraud was the most common and accounted for over half the number of fraudulent claims brought in 2011 (over 70,000). The ABI say that fraudulent claims (from all sources) adds around £50 to the annual insurance bill of each UK policyholder.

Back in July this year, the ABI announced the introduction of the Insurance Fraud Register (IFR) which they said would contain a list of the UK’s known fraudsters and would be used to help insurers to identify fraudsters when they look to purchase insurance and other financial products. The move was welcomed, industry-wide, although many quite rightly pointed out that this (in conjunction with all other initiatives) should have been put into effect years ago.

With the official launch of the IFR, last week, it is hoped that it will become easier for insurers to identify potential fraudsters and far more difficult for them to obtain insurance and finance in the future. A conviction of fraud is not required and those who are “suspected” of being fraudsters will be added to the list, which will then be shared with all other insurance companies.

It is hoped that the insurers will act responsibly and that they will exercise great caution before committing names to the IFR. It remains to be seen how this will work in practice, with those on the register facing the prospect of being shunned/penalised, should they lose their “appeal”.

One should not, however, lose sight of the fact that on the insurers’ own statistics it is very much a tiny minority who make and then pursue fraudulent claims; the vast majority of the claims are brought by innocent claimants who are pursuing perfectly legitimate insurance claims.

It is, however, rather ironic that the ABI’s announcement and launch of the IFR comes at a time when independent surveys commissioned on behalf of accident victims suffering from “whiplash” shows that there has been a fall of almost 24,000 claims since 2011.  Indeed, one of the surveys revealed that almost 40% of people who suffered a “whiplash” injury, have never made a claim for it.

Tom Ranson of Ashtons Legal’s injury services team comments: “The fight against fraud must be a shared one. We all have to continue to be vigilant and fraud should be stamped out wherever it is found. As responsible personal injury lawyers, we at Ashtons Legal pride ourselves on maintaining excellent standards, not only in relation to our client care but also in relation to our role within the claim process. We hope that the insurers will also engage in the process in a sensible and responsible manner.”