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Everything you need to know about insurance fraud
- What is fraud?
- How you can ensure you don’t accidentally commit fraud
- What LV= is doing to tackle fraud
At LV=, tackling insurance fraud is one of our greatest challenges – and our most important. Because we put our customers at the heart of everything we do, it’s essential that we work together to prevent fraud and stop criminals in their tracks to help stop your premiums rising.
“LV= takes fraud very seriously,” says Simon Roylance, LV=’s Claims Crime Prevention Team Manager.
“Whether that’s false insurance claims or people deliberately providing false information to lower their premium, we will always take action against fraudsters to protect the premiums and rights of our honest customers.”
But insurance fraud can seem complicated and confusing. So what actually defines fraud, and how can you avoid committing it, or being a victim of it?
What is insurance fraud?
Insurance fraud includes withholding information from your insurer. This could be anything from your occupation and correct age to motoring convictions or other issues. Whether withholding this information was intentional or not, it could invalidate your cover. This means if you make a claim, your insurance company may not pay.
But regardless of if you accidentally forget to tell your insurer something or you did it on purpose, the consequences can be severe.
What is claims fraud?
Submitting a fraudulent car insurance claim can have serious consequences. In addition to invalidating your coverage, you may face fines or even prosecution. News stories frequently highlight individuals and criminal organisations being prosecuted for insurance fraud.
How can I make sure I don’t unintentionally commit fraud?
Honesty is the best policy. When you buy insurance, answer all questions as honestly and accurately as you can. If in doubt, make a note to check and call your insurer back to clarify any details. Don’t forget to update your insurer if you:
- Change your address and/or your name
- Change your occupation
- Change the registered keeper of the vehicle
- Have changed the main driver of the vehicle (the person who drives most often), or added another driver
- Have a car accident even if you’re not making a claim
- Have penalty points added to your licence
- Start using your car to drive to and from work
- Make any modifications to your car
Car insurance fraud
Because car insurance is a legal requirement in the UK, it’s where fraud is most often committed.
Car insurance fraud is an escalating issue. Did you know drivers who fail to tell their insurer about penalty points picked up as the result of driving offences would be classed as committing fraud? Some insurers, including LV=, won’t need to ask about your driving convictions if you provide your driving licence number when taking out your policy. If you notice that your driving offences are missing from your policy documents it's best to double check straight away!
Different types of car insurance fraud
What is Fronting?
Put simply, Fronting is when someone is added to a car insurance policy as a secondary or named driver, but they’re in fact the main driver. For example, if a parent added their son or daughter to their own insurance policy as a named driver, rather than getting the younger driver their own policy. This brings down the cost of insuring a younger driver considerably, but it is insurance fraud.
Watch our handy video about fronting and how to avoid it.
Modifications
You should always let your insurer know if you’re making any modifications to your car, or if you buy a car that you know has been modified, as your premium may change. Fitting your car with increased security or safety features may bring down your premium, but most modifications will result in an increase, especially if they add value to the car or boost its performance.
Over the air (OTA) monthly updates are covered as standard when you insure your electric vehicle with us, however if you or the previous owner have paid for any additional performance upgrades that affect speed or acceleration, you must let us know. You'll only need to let us know once and not every time you upgrade.
Abandoning a Car
This is considered fraud when an owner abandons their car, sets fire to it or does something similar to dispose of it, and then claims it has been stolen to recover money through their insurance.
Change of circumstances
Insurance premiums are calculated on a range of different factors, so when those factors change, it’s important you let your insurer know. These include things like your home address, where your car is parked overnight, your occupation and the way you use your vehicle (for example, whether you commute to work every day in your car).
Victims of car insurance fraud
Ghost Brokers
Ghost brokers are fraudsters who pose as insurance brokers and sell fake policies to motorists. Some policies might be genuine insurance policies, bought from official companies and then altered, before being passed on to motorists who have no idea they’re buying a policy that’s not legitimate.
Other instances of ghost broking include scammers buying an insurance policy but cancelling it quickly so they can claim the refund back, as well as the victim’s money.
A #SteerClearOfFraud campaign was launched by Metropolitan Police in 2018 to alert motorists to the risks of ghost brokers, and the LV= fraud team is continuing to look at new ways to combat them.
“Ghost Broking continues to be a substantial problem for the industry and we are seeing more examples of ghost brokers using stolen identities when setting up policies,” says LV=’s Simon Roylance.
“We need to do more to raise public awareness of the risks of using a ghost broker which can leave them uninsured and out of pocket.”
What is a ‘Crash for Cash’ scam?
A ‘Crash for Cash’ scam is when a scammer deliberately causes an accident for which another driver can be blamed.
“We still see fraud in the personal injury sector driven by crash for cash and claims farming as a major threat,” says Simon. “However, the insurance industry, solicitors, law enforcement and regulators have stepped up efforts to combat fraudulent activity in the past few years which has resulted in action against fraudsters and enablers.”
The Insurance Fraud Bureau has identified three of the methods fraudsters use to pull off a ‘Crash for Cash scam’:
- The staged accident
This usually involves two vehicles, both driven by criminals, and crashed away from any witnesses. - The induced accident
This is when criminals brake suddenly or deliberately create a crash involving unsuspecting motorists - The ghost accident
This one actually involves no accident at all, but instead a fake insurance claim is submitted
Moped Crash for Cash scams
When it comes to ‘Crash for Cash’ incidents, it’s not just cars; LV= and the rest of the insurance industry have seen a significant increase in the number of induced incidents involving mopeds and continue to receive on-going reports of customers being targeted by ‘courier riders’ who deliberately crash into their vehicles, just to make false insurance claims. The Insurance Fraud Bureau (IFB) has found over 4,000 people have been targeted by a moped scam within the last three years, following an analysis of fraudulent claims received by 21 insurers.
Signs of a moped accident scam
- Often, contact is made at a very low speed.
- The moped rider may be purposely obscured by another vehicle before the impact.
- After the incident, the rider will immediately photograph the other vehicle.
- The rider will be reluctant to remove their helmet and may make a fuss at the scene.
- They may later submit claims for damage to their bike and possibly personal injury.
Is ‘Crash for Cash’ fraud?
Yes, and this type of scam has now been compounded, as the scammers are also using these events to steal customer’s identities. Following an incident with a moped, the rider will ask to see the other driver’s driving licence and insurance details. They’ll often take photographs of the items on their mobile phones.
The innocent driver will then learn that their details have been used to take out multiple insurance policies, which will be used to submit fraudulent claims.
What is ‘Crash for Cash’ money used for?
The criminals running these scams are usually part of an organised crime group, meaning the proceeds of any fraud will be used to fund more serious crimes.
Financial Crime Teams have an open operation called Op Black Newells, focussed on looking into these cases and assisting the IFB and the Insurance Fraud Enforcement Department of the City of London Police (IFED).
What to do if you’re involved in a ‘Crash for Cash’ scam?
- Only give the moped rider your name, vehicle registration plate and details of your insurance company – not your specific policy.
- Do not allow the rider to photograph your driving licence or insurance documents.
- Note if there was anything suspicious about the incident and tell your insurer as soon as possible when reporting the claim.
- Make sure you report the incident to the Insurance Fraud Bureau cheatline
- Make sure you get the full contact details of the rider including their name, telephone number and insurance details.
- Take photographs or a video to accurately record the scene and damage (if any) caused to the moped. Also record the moped rider if it's safe to do so.
- Write down the make, model and registration number of the rider’s moped, noting any distinguishable features.
- Make a note of what the rider looks like and any injuries they appear to/claim to have.
- Get the names and addresses of any independent witnesses, and check for any available CCTV or dashcam footage which may help prove what happened.
Our team: a day in the life
No two days are the same for the LV= fraud team, who are constantly working hard to ensure criminals are brought to justice and honest LV= customers receive the very best premiums.
In a recent case, a young woman raised suspicion when she called customer service twice to ask if she was covered to drive other cars. In the calls, she referred to the vehicle on the policy as her own. However, she was actually the named driver on the policy – the policy holder was her grandmother. She mentioned they were looking at insuring the car over in her own name, as her grandmother already had a car of her own.
Our Anti-Fraud team investigated, trawling back through the recordings of the calls and requesting additional documents. These confirmed that the granddaughter was in fact the owner and registered keeper of the vehicle, and the policy had been fronted to obtain a cheaper premium. The policy was cancelled.
LV= won a high profile legal case in 2018 in the Supreme Court against a so-called expert witness, setting a legal precedent which will deter some of the ‘professional enablers’ we see on fraudulent claims.
Kamar Khan and Dr Asef Zafar were found guilty of contempt of court after presenting spurious medical documents on behalf of a claimant as evidence in a personal injury insurance claim. The deception came to light when the law firm accidentally submitted both the real report (stating an injury of one week) and the altered one (claiming six to eight months of pain).
When summing up the case at the Royal Courts of Justice, Judge Justice Garnham said that by investigating this “LV= had done the Court a service”.
“Critical to the operation of our system of justice is the trust that courts have to place in solicitor and expert witnesses,” he said.
“Those who make false claims should expect to go to prison. Solicitors and expert witnesses who act dishonestly in the evidence they give to the court, whether in support of such claims or otherwise, must expect a similar outcome.”
Things to keep in mind
When it comes to fraud, just remember to stay vigilant, and always update your insurer if anything changes with your circumstances.