Insurers are sounding the alarm over a surge in fraudulent claims, with fake and doctored images at the heart of the scam.
Industry experts have noticed an increase in attempts to swindle payouts for incidents that might not have occurred, leveraging sophisticated tech to fabricate evidence. Whereas, previously fraudsters would orchestrate a "crash-for-cash" scenario on the streets; now they're digitally altering registration plates, damage, or paperwork to support their bogus claims.
In some instances, the vehicles involved have already been scrapped. Zurich UK's head of claims fraud, Scott Clayton, said "Just as we use technology to help us detect fraud, dishonest people are increasingly using technology to try to get us to pay out for something that may not even have happened."
"This is a pocket of activity that is definitely growing. Technology has got more sophisticated in recent years, which is creating new opportunities for people or groups to submit fake claims. This means that we, as insurers, have to keep up with technology and be alive to some of the new and emerging ways that people will try to make a fraudulent claims."
Allianz has reported a 300% increase in cases where apps were used to manipulate real-world images, videos, and documents between the years 2021-22 and 2022-23. Matt Crabtree, the financial crime intelligence and investigation strategy chief at Allianz, remarked: "There is some fantastic technology out there, which is making our lives so much better in many ways."
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"However, the sad reality is that fraudsters are using this same technology for their own illegal purposes and to target innocent members of the public to make a profit, with total disregard for the impact to the victim. Although insurance fraud is evolving all the time, so are our robust controls and systems, which are designed to spot emerging trends.
"Our highly trained investigators then root out those who are trying to exploit the system, in order to protect honest customers and keep costs down."
Insurance giant Aviva revealed that one eagle-eyed investigator foiled a theft claim after spotting something fishy about an image of a watch, valued at over £20,000. Upon further scrutiny, she discovered an identical online image of the same watch, showing the exact same time down to the second, leading Aviva to reject the claim.
Overall, Aviva spotted out more than 9,250 fraudulent cases in 2022, preventing £120million in false claims. The company has also noticed a trend where organised whiplash con artists are shifting from motor injury scams to targeting vehicle repair and replacement fraud.
Insurance costs are skyrocketing amid the cost-of-living crisis, with insurers grappling with increased expenses due to higher charges for repairs, materials, and replacement vehicles. The Association of British Insurers (ABI) has revealed that the average price for comprehensive motor insurance has surged by 33% or £157 in the first quarter of this year compared to the same period last year.
The ABI's analysis of policies sold shows that the typical price paid in the first quarter of 2024 was £635, which is 1% increase from the previous quarter. Despite rising costs, insurers are shouldering the burden, with the average claim paid reaching an all-time high of £4,800.
Mark Allen, the ABI's head of fraud and financial crime, stated: "Protecting insurance customers against the impact of fraud remains an industry priority. Insurers are alive to the various tactics fraudsters deploy and use sophisticated software to detect false or edited images."
"The use of technology is a key part of the insurance sector's counter fraud weaponry and there will be no let-up in the industry's prevention and detection of fraudulent claims, and enforcement against insurance fraudsters."
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