UK fraud stats

2 minute read  |  July 6, 2016

Following the ABI’s report into the cost of fraudulent claims on the motor insurance industry, A2J spokesperson, and managing partner of Amelans Solicitors, Andrew Twambley, questioned how the figures are collated.

The report states that fraudulent claims add an additional £50 per year to a motorist’s insurance premium, a figure confirmed by Chancellor George Osborne in his autumn statement.

The real cost of fraudulent claims

While fraudulent claims are seen as a major issue for the insurance industry, the definition of fraudulent claims and their financial impact is still a hotly debated issue.

A report on motor fraud by Capital Economics, an independent research company, suggested the ABI’s definition of fraud is too ambiguous, with suspected fraud and proven fraud being treated as one and the same. Suspected fraud includes ‘unreturned paperwork’ and ‘failure to contact’ as examples, whereas proven fraud requires a “successful prosecution in court or a police caution”.

Capital’s report states that if the numbers were representative of proven fraud alone, the cost to individual motorists would be as low as £4.

Brexit backlash 

With the referendum taking up most of the Government’s attention in recent weeks, small claims and whiplash reform seem to have taken a back seat. In addition, Osborne confirmed before the EU referendum the possibility of an emergency budget to claw back the expected deficit should the UK leave the EU.

Now with the Brexit victory if a deficit does occur, as remain campaigners have warned, it is likely that even more cost saving measures could be put in place, meaning the announced reforms could just be the beginning.

Our view

Time will tell whether these changes will be for the benefit of the average motorist, especially if they are unfortunate enough to be injured in an accident that wasn’t their fault. Will the proposed £50 annual saving be worth it if they are unable to claim?

Without campaigns like Access to Justice fighting against the reforms, victims of non fault accidents will end up accepting the insurer’s first offer, representing themselves in the Small Claims Court or paying legal costs from any compensation awarded. Of course all reasonable steps must be taken to combat all insurance fraud, but not at the expense of legitimate, innocent victims.

The insurers’ approach could create the impression that they may possibly reap the rewards while innocent victims lose out. The facts used by the ABI could be seen to be misleading and putting public distrust on a sector that prides itself on factual accuracy.

Much like the recent referendum campaigning, the truth is out there, if you look hard enough.

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