Insurance Fraud, a Worldwide Issue!
10 percent of overall claims expenditure are caused by detected and undetected fraud cases. Frauds in the fields of motor insurance are ranking among the ones with the highest potential for profit loses for insurers. Countermeasures from the insurance industry are becoming mandatory if we take a closer look at the following fraud numbers from major European countries, USA, Canada and Australia.
The Association of British Insurers – ABI estimates that fraud on average, adds an extra £50 to the annual insurance bill for every UK policyholder (abi.org.uk). However, important steps have been made in the UK with reporting of insurance fraud to the Insurance Fraud Bureau (IFB) and the adaption of intelligent claims management and analytical technologies by insurers.
Fraud in Italy is still problematic and that is why Italy’s motor insurance premiums have risen to the highest levels in the EU. According to IVASS due to suspicious events their claims expenditure has increased by 21,2 percent in the period from 2004 till 2014 (ivass.it).
German Insurance Association GDV estimates that one in ten claims reported can be put down to insurance fraud, generating overall losses of 4 billion EUR (gdv.de). A German insurance industry information system (HIS) has been recognized as an information bureau in order to combat fraud.
According to Insurance Europe (insuranceeurope.eu), there were 35.042 fraudulent insurance claims recorded in France in 2011, leading to €168m not being paid out to dishonest individuals (FFSA statistics).
Scandinavian countries are also not immune to fraud. Insurance fraud investigators in Sweden have detected fraudulent claims for losses of a total of €40m in 2011, whereas the Finland insurance association (FFI) study found that 27 percent of interviewed individuals knew a person “who has deceived his/her insurance company” (insuranceeurope.eu).
The total cost of insurance fraud in USA is estimated at $40 billion per year (non-health insurance). According to The FBI (Federal Bureau of Investigation) an average U.S. family have to pay between $400 and $700 per year in the form of increased premiums due to fraud (fbi.gov).
The situation in Canada is also causing great concern, since cost of insurance fraud is estimated at $3 billion annually (ibc.ca). 10 to 15 percent of insurance premiums are being used to cover the cost of insurance fraud.
Motor insurance has the highest suspected level of insurance fraud in Australia as well. The Insurance Council of Australia claims that fraud adds an extra A$70 to the cost of each and every general insurance policy issued in Australia, with the average family contributing in excess of A$400 annually towards fraudulent claims (Australian Institute of Criminology).
The development of a transnational business mindset has enabled national fraudsters to cogenerate transnational fraud scams as well. One of the prevailing ideas of this years’ Insurance Fraud Conference in London was about joining national and transnational forces in the fight against fraud. Collaboration and stepping beyond the competition barriers within the industry is becoming inevitable.