Insurance fraud continues to be a problem for the industry, but insurers are fighting back
Insurance fraud has been a problem that insurers have been dealing with for nearly as long as the industry has existed. Over the past few years, fraud has become a much more significant problem, however, as fraud methods are becoming more sophisticated and insurers are becoming more exposed to extreme financial losses. Insurers are doing what they can to combat fraud, however, and are becoming more adept at weeding it out and identifying those responsible.
Insurers expose more than $3.6 million in fraud every day in the UK
In the United Kingdom, insurance fraud detection is becoming more capable. According to the Association of British Insurers, the insurance industry is exposing more than $3.6 million worth of fraud every single day. For consumers, this may be good news, as catching fraud can mean lower insurance rates down the line. Fraud is one of the main reasons that insurance rates increase in several sectors, as fraud leads to significant losses that insurers must recover from.
Fraud is on the decline, with insurance premiums following
According to the Association of British Insurers, catching fraud is one of the reasons insurance rates have become somewhat stable in the United Kingdom. In the case of auto insurance, exposing fraud has lead to a decrease in premiums of 5% in 2014. Throughout last year, insurers detected more than 130,000 fraudulent claims, which is 9% more than they detected in 2013. The cost of this fraud in 2014 was 3% higher than what was reported in 2013. Auto insurance fraud was among the most common cases of fraud that the industry experienced during 2014.
Fraudulent property claims are becoming less common
In the case of homeowners insurance, fraudulent claims have declined. This may be due to strong deterrent measures taking effect in the United Kingdom, which have been a boon for the insurance industry. As fraudulent property claims decline, the cost of homeowners insurance is becoming more affordable. The problem, however, is that government policies, such as tax changes, may increase homeowners insurance premiums by a significant margin in the coming years.