Counting the cost of soaring insurance fraud

The past 12 months set a high water mark for fraud. Annual fraud losses across the UK are now estimated to be £70 billion. Of this, £3.5 billion is in financial services, with insurance fraud topping £2.1 billion, marking a 23 per cent year-on-year rise.

Broadly speaking the numbers break down into an estimated £1.7 billion in undetected fraud losses, £38 million in detected insurance fraud when claims get paid before being flagged as fraudulent and £350 million in organised staged motor vehicle accidents.

Across all financial services, the vast majority of fraud - more than 90 per cent - is being carried out by consumers or ‘non-professional' fraudsters - so-called firstparty fraud.

But the industry offers rich pickings for fraudsters and as a result it continues to be blighted by fraud.

Insurers continue to be in the firing line in the UK because as the cost of austerity bites, those struggling with challenging economic times see it as quick route to converting their monthly premiums into a payout.

This analyst report examines the latest fraud statistics and provides robust statistical insights into the characteristics of fraudsters and the factors driving their behaviour.

Topics covered:

1) Austerity bites.

2) Who are the fraudsters.

3) Where are the fraudsters.

4) The outlook.