Keoghs issues warning on rising fraud trends

29/07/2010

Market-leading counter-fraud firm Keoghs is warning that insurers need to focus fraud detection and prevention efforts to deal with rising volumes of liability fraud and exaggerated or fabricated claims arising from low-speed impacts.

The number of cases of liability fraud referred to Keoghs for handling has risen by more than 150%, whilst the volume of suspicious claims involving low-speed impacts are up by 63% compared with twelve months ago.

Commenting on the trends, James Heath, director of counter-fraud strategy at Keoghs said: "The substantial rise in liability fraud claims is largely down to two factors.

“Firstly, the recession has driven opportunistic and dishonest employees and members of the public to attempt to obtain cash from their employers and public venues (for example large shopping centres) through deception.

“Secondly, as our insurer clients apply more of the skills and processes developed in the motor fraud arena to other forms of insurance they are detecting increasing volumes of fraud. As such, we would urge any insurer who is not yet undertaking this type of process review to consider it as a high priority.

“Increases in suspicious low-speed impact claims could also be recession-fuelled to some extent, but the concern here is that this rise could be the tip of the iceberg. Insurers are currently reviewing their processes in this area following the MoJ reforms of the claims process – and suspect claimants may be attempting to take advantage of the situation.”

This warning comes as the industry braces itself for further rises in the volumes of suspicious claims across the board. The latest fraud statistics from the ABI, published today show that insurers detected 122,000 fraudulent insurance claims with a total value of £840m – up 14% on the previous year. These figures include 8,500 fraudulent employers’ and public liability claims.

Keoghs’ own management information shows that they saved their clients £65.5 million in the last twelve months by fighting suspect insurance claims across all lines of insurance business. This figure was 39% higher than in the previous year – with more than half of the suspicious claims handled by the firm being resolved with no payments made to the claimants.

Original Article: Keoghs press release