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Credit crunch sees increase in insurance fraud

16 December 2008

Insurance fraud has seen an increase during the credit crunch. Insurers are seeing evidence of increasing underwriting fraud which is costing honest motor insurance customers between £50 and £60 each per policy¹.

In a desperate attempt to slash the price of motor insurance premiums, people are declaring false information perhaps unaware that their insurance may be invalid as a consequence.

Simon Warsop, director of motor pricing at Norwich Union, said, "As the largest insurer in the UK we're at the forefront of the fight against fraud for the benefit of our honest customers. We have systems in place to identify policies that are bought using fabricated data, so when declaring information for an insurance quote it's essential that customers have supplied accurate information to ensure they have adequate cover in the event that they need to make a claim."

"Fortunately, the majority of our customers are entirely honest and provide accurate, fully disclosed information when they call or go online for a quote. However, there are dishonest people that risk invalidating their insurance by giving incorrect information in a bid to get cheaper motor insurance."

Fraud costs the insurance industry over £1.6 billion a year, money that has to be passed on to customers¹.

 
This equates to £4 million per day and increases insurance premiums for honest customers by up to £60 per policy².

1% (400,000) of all drivers are unlicensed and these drivers are up to 9 times more likely to have a crash than licensed drivers^3.

 
Simon Warsop added, "As the nation feels the pinch from the credit crunch, more and more people think that they can get away with dishonesty for what is seen as a victimless crime. Insurance fraud is certainly not a victimless crime. The victims are actually the majority of honest drivers who are subsidising the dishonest ones."

"The whole point of insurance is to cover the costs for a potential future loss, so running the risk of invalidating your insurance by knowingly providing false information is false economy. Honesty is definitely the best policy, and I would certainly advise against 'massaging your details' in order to get the cheapest quote. In times of economic turmoil insurance cover is more important than ever so don't jeopardise your cover by giving false information."

1. Source: Norwich Union data 2008
2. Source: Norwich Union data 2008
3. Source: DfT Road Safety Research Report Number 48 'Research into Unlicensed Driving Final Report November 2003'

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