Near to 1 in 3 commit insurance fraud. Make sure you're safe.

By Charlotte Yau

Up to one third of us have committed insurance fraud. Read on to find out if you’re one of them.

A study commissioned by insurers AXA found that more than two million people have made a fraudulent insurance claim. The figures could be even bigger as most people wouldn't admit to breaking the law in the first place and some may not even think what they are doing is illegal.

A big problem is that many view insurance fraud as a victimless crime, while there is a general distrust of insurers, AXA said. 

Half of the study’s respondents didn’t believe insurers were always honest, while a third thought that an exaggerated claim was justifiable because insurers ‘try to trick their customers with small print’. You may find it hard to feel sorry for those rich insurers walking around in fancy suits, but you could end up paying more for your insurance products as a result of fraudulent claims.

What type of fraud are we committing?

So here is an example of how you could be committing fraud, even without meaning to.

The report highlighted the example of ‘phone upgrade fraud’, where someone falsely claims their device has been stolen or broken just as a new model is released. Similarly, the rise of "compensation culture" had triggered a sharp rise in whiplash injury claims.

However, the report did criticise claims management companies. They are the folks who send you annoying email and phone spam asking if you want to claim for accidents you probably haven’t been in or PPI that you have never had. They’ve been accused of adding to the cost of insurance by making too many dodgy claims.

In its recommendations, the report called for legal reforms such as a six-month cut-off period for bringing a compensation claim forward.

Criminal cases pushing up premiums

It may seem like a victimless crime, but if insurers keep having to make unnecessary payouts then premiums will increase, meaning you could end up paying more for your insurance.

Figures show that fraud committed by criminal gangs is going up, with ‘crash for cash accidents’, where people deliberately cause an accident in order to make an insurance claim, costing motorists £400 million a year in higher premiums alone.

Incidents involving workplace-related claims for things like noise-induced hearing loss or trips or slips show that, in all cases, the fraudster had no contractual relationship with the insurer, AXA said.

Top takeaway

Although trying to claim a few quid from insurance companies may seem harmless, if you’re doing it fraudulently then you are committing a crime. Those pesky calls asking if you were sold PPI or been in a crash that wasn't your fault with a promise of a payout may be tempting but it's a dangerous game and could end costing you money in the long run.

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