Aviva reports 16% rise in application fraud over same period in 2021

• 33% of motorists have changed at least one material detail on their motor insurance application to save money
• 88% of motorists say insurance fraud is unacceptable, and 87% say it pushes up the cost of insurance
• 17% admit to insuring a car in their name, even if someone else, such as their child, is the main driver
• 27% of motorists say they would consider lying on an insurance application to save money
• Consumers should be wary of insurance offers from unclear, unsolicited sources

Aviva has recorded a 16% increase in the amount of motor insurance policy fraud it has detected through to October this year, compared to the same period last year.*

The UK’s leading insurer has blocked more than 23,300 fraudulent or suspect motor insurance applications through the first ten months of this year, compared with just over 20,000 at this same point last year. The fraud findings come amidst a squeeze on the cost of living, and Aviva is warning motorists who may be tempted to lie to their insurer in an attempt to save a few pounds to think twice.

Iain Hamilton, Head of Motor Underwriting, Aviva, said, “The overwhelming majority of our customers are honest, and we have a duty to make sure that we do everything we can to minimise the impact of fraud on their motor insurance premiums. But the increase in attempted application fraud shows that insurers cannot be complacent, and must do everything we can to reduce the impact of fraud on premiums for our customers.

“One of the key ways we can do this is to educate motorists about various forms of application fraud so that they are aware of ghost brokers offering cheap but worthless insurance, while also ensuring that they fill out their insurance application as accurately as possible so they have the right cover for their needs. If motorists are in any doubt about their insurance, they should speak with their insurer or broker to confirm they are adequately covered.”

Ghost Broking

Ghost broking accounts for 15% of all policy fraud detected by Aviva. Ghost broking occurs when an unauthorised person acts as an insurance intermediary and purchases insurance policies using false or misleading information about the customer to acquire cheaper insurance on their behalf. Ghost brokers will usually amend the policy details before sharing with their ‘customer’ to show ‘proof’ of their insurance purchase. However, the insurance policy is all but worthless, as the ghost broker lied about the true identity and/or nature of the risk being insured (such as address, age of driver, etc.).

Buying a bogus policy through a ghost broker can have serious consequences, including police seizing the car, a fixed penalty notice (£300) and being liable for any damage caused while driving without valid insurance. Further, the motorist will need to purchase valid insurance in order to get their car back on the road, after paying at least £150 to get their car released from the pound.

However, these penalties do not deter everyone. Research on behalf of Aviva found that one in five (20%) motorists would consider buying insurance from an individual on social media offering cheap car insurance, even if they suspected the person was not a genuine insurance broker.** One in four (25%) motorists said they have been approached by someone online offering cheap car insurance.

As pressure mounts on the cost of living, motor insurance customers should be wary of insurance offers from unclear, unsolicited or unusual sources – especially online messaging platforms. If customers have any concerns about the legitimacy of an insurance offer, they can check the broker’s status on the Financial Conduct Authority or British Insurance Brokers’ Association websites, or alternatively contact the insurer directly. Ultimately, if a premium looks too good to be true, then it probably is.

Application fraud

But ghost broking is just one form of application fraud. The majority of fraudulent applications Aviva detects are from applicants who change relevant information about themselves or their driving history in attempt to secure cheaper cover. This could include, for example, saying the car is kept in a garage overnight, even though the customer doesn’t have a garage, or changing the driver’s age, how long they’ve held their licence, how many penalty points they have, their occupation, etc.

Another common form of policy fraud is called ‘fronting’, with one in six (17%) motorists admitting they have fronted a policy. Fronting occurs when a motorist claims to be the main driver on a policy when they are not – for example, a parent ‘fronting’ a policy for their child, who is recorded as a named driver on the policy (or not on the policy at all), but in reality, is the main driver of the vehicle. Aviva recommends that parents who are looking for insurance for their children should try a telematics or connected car policy to get a more affordable insurance premium suitable for young drivers. 

Taking action

Aviva’s research found that 88% of motorists believe insurance fraud is unacceptable and 85% of motorists want insurers to do more to combat insurance fraud. Aviva believes the fight against insurance fraud starts at the point of application, and is screening personal and commercial motor insurance applications for links to fraudulent behaviour and/or links to known or suspected fraudsters. This will stop fraudsters from accessing insurance products, while also preventing exposure to bogus insurance claims in the future.

Iain concludes, “When it comes to applying for insurance, honesty really is the best policy. Motorists should avoid the temptation to change their details in attempt to save a few pounds, as the penalties for policy fraud can be costly and add pressure to motor insurance premiums for all motorists.”

- Ends -

Sources:

_{*Aviva fraud statistics based on proprietary underwriting data on detected application fraud.}

_{**Research conducted by Censuswide with 2,009 UK drivers (aged 18+) with a full driving license between 17.11.2022 - 21.11.2022.}

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