Fraud is beginning to expand throughout the United Kingdom
Auto insurance fraud continues to expand in the United Kingdom. According to the Association of British Insurers, fraud is quickly becoming one of the most problematic challenges that the insurance industry is facing. The number of fraudulent insurance applications, in particular, is increase, which is beginning to put more strain on insurance companies and is leading to higher costs as insurers invest more in anti-fraud measures. Auto insurance fraud is likely to place consumers under greater financial pressure, as well, as fraudulent activity will eventually lead to higher premiums.
Fraudulent applications are becoming more common among drivers
The Association of British Insurers notes that some 212,000 fraudulent insurance applications were uncovered in 2014. This represents a 18% jump compared to the fraudulent applications that were reported in 2013. The organization reports that more than 4,000 fraudulent applications are uncovered every week, with the most common justification for these applications being that consumers “forgot” to tell the truth about previous claims or convictions.
Parents often file fraudulent applications in order to get lower premiums for their children
Notably, many parents filed applications to have the vehicle that their children primarily drove under their own name in order to receive less expensive auto insurance coverage. This is a practice known as “fronting,” and represents fraudulent activity that can take advantage of an insurance provider. According to information from The Automobile Association, auto insurance rates have begun creeping up as a result of fraudulent practices, the average premium growing by 5.2% over a three month period this year.
Fraud may continue to push auto insurance premiums higher
Fraud is expected to push insurance rates higher in the coming years. Insurers are working to recover from the financial losses that they see from fraud, which is forcing them to increase premiums. As such, fraud is not only a problem for insurers, as it also places consumers under greater financial pressure. In some cases, growing premiums are making it too difficult for consumers to afford their auto insurance coverage, which is forcing them to drive without coverage.