Opportunistic claims fraud on the rise

The Insurance Post Fraud Survey 2024 has confirmed that there continues to be a significant increase in opportunistic claims fraud.

In a survey of insurance fraud leaders, 83% of respondents believed this fraud type to be on the rise. Second in the list came professional or organised claims fraud (52%) with application fraud (33%) coming third. Identity fraud was considered the fraud typology with the fourth biggest increase having risen from sixth in the 2023 Survey.

The persistent challenge facing Insurers with opportunistic claims fraud perhaps comes as no great surprise.  The financial pressure on individuals that has arisen as a consequence of the cost of living crisis has inevitably resulted in Claimants seeking to exaggerate or embellish claims to make what they consider to be easy money. Whilst fraud typologies such as organised claims fraud and “cash for crash” remain significant problems, insurers have faced an influx of claims that, whilst appearing genuine at presentation, are clearly exaggerated upon closer scrutiny. This mirrors the experience of Kennedys’ Fraud team whereby many outwardly genuine claims continue to be successfully defeated as a result of a Claimant’s willingness to grossly exaggerate their losses.

The survey also found 88.5% of respondents regarded deploying technology at the point of claims remains the most successful stage at defeating fraudsters. The point of investigation came second with the point of inception rising to third from its fourth position in 2023. Whilst insurers continue to excel in identifying fraud at the claims stage, there is also an acknowledgment that fraud needs to combatted as early as possible to protect the customer from the cost of fraud and deter fraudsters from taking out policies.

When asked how they would look to improve their fraud strategy, over 65% of respondents confirmed that they would choose to prioritise access to broader or shared data for investment. Many insurers agree that increased data sharing will prove key in defeating opportunistic claims in sectors where this has perhaps not always been a priority. Fraudulent travel claims and fraudulent property claims for instance are often considered more difficult to detect in the absence of a cohesive industry database.

A range of operational challenges facing insurers in managing their fraud strategy were cited, which include:

• the integration of third party tools in existing processes
• the accuracy of data and false positives
• the complexity in configuring technology solutions
• access to data

Notwithstanding such challenges, Insurers are continuing to invest heavily in technology and data to address fraud with over 42% of respondents confirming that their counter fraud budget had increased within the past 12 months.

Whilst economic pressure remains a constant in society, we can expect to see a continuing increase in fraudulent claims, particularly opportunistic claims. Insurers should continue to assess claims for potential fraud throughout their lifecycle as we have seen frequently that a genuine claim can evolve into dishonest exaggeration.