Insurance customers are being warned that lying to their provider in an attempt to make some easy money could leave them with big bills or even a criminal record, after a fraud prevention body has seen a jump in bogus claims.
Between 2017 and 2018 there has been a 27% increase in fraudulent insurance claims across the UK, including spikes in the motor and household insurance sectors, Cifas said.
Cifas has launched a “faces of fraud” campaign which warns people that seemingly harmless opportunities to make some quick cash or get a better deal than they are entitled to may be considered criminal acts.
False household insurance claims have increased by 52%, with claimants aged 31 to 40 being the biggest culprits, according to Cifas.
Meanwhile, bogus claims in motor insurance have increased by 45%, with 21 to 30-year-olds making up the largest group, according to data from Cifas members.
Cifas said a particular type of motor insurance fraud known as “fronting” is generally in decline – although the proportion of millennials aged 21 to 30 who are committing this offence increased last year.
More than half (58%) of fronting incidents recorded in 2018 involved this age group, up from 40% in 2017.
Fronting happens when someone falsely claims to be the main driver of a vehicle when the main driver is actually someone else, in order to obtain a lower insurance premium.
Younger drivers tend to pay higher motor insurance premiums as their age group is more likely to be involved in accidents – although there are legal ways in which they may be able to get a lower premium, for example by having a “black box” policy which rewards safer drivers with cheaper insurance.
Chief executive officer of Cifas, Mike Haley, said: “As the rise of false claims in household and motor insurance shows, many people are seemingly unaware of the risks they’re running and the consequences it can have by committing everyday fraud.
“While the overall downturn in fronting insurance policies is a positive sign, the fact that young people are increasingly more likely to commit that type of fraud highlights the need for continuing education.
“More needs to be done to raise awareness about the harm of fraud and financial crime.”
Cifas is urging people to consider the consequences of making false insurance claims or fronting insurance policies – which it said can be far more serious than many people imagine.
Consequences can include non-payment of claims; cancellation of the insurance policy; people having to pay costs that arise from an accident; and a record with Cifas and the Insurance Fraud Register (IFR), making it more difficult to obtain insurance and other financial services.
Cases could also be reported to the police for investigation, potentially leading to a criminal conviction and a prison sentence.
Mr Haley said: “False insurance claim fraud and fronting insurance policies fraud are often seen as an easy way to make a bit of money without hurting anyone.
“Yet the idea that fraud is a victimless crime is completely false.
“First, false insurance claims and fronting insurance policies are illegal.
“They can impact your life and career, making it near-impossible to buy insurance in the future and can even lead to a criminal record.
“Second, committing fraud hurts everyone: your neighbours, your friends, people in the area, and the UK as a whole.
“Insurers have to spend longer reviewing insurance claims and policy requests, premiums go up, and everyone loses out.”