8.4 Million UK motor insurance policies at risk of application fraud

  • New study from LexisNexis Risk Solutions finds one in three UK insured drivers believe some form of application adjustment to obtain a cheaper quote is acceptable
  • With over 24m active motor insurance policies in the UK, LexisNexis data suggests that 8.4 million policies could be at risk

London, UK – A new research study into motor insurance fraud has found that more than one third (35%) of insured motorists believe that it is acceptable to omit or adjust data to reduce their motor insurance premiums on application, according to LexisNexis® Risk Solutions.

With more than 24 million motor insurance policies in the UK the study from LexisNexis Risk Solutions suggests that the scale of application fraud could therefore be far higher than the 212,000 annually detected cases with potentially up to 8.4 million policies at risk. 

The study, which tracks UK insured drivers’ attitudes towards fraud, found that the number of insured motorists who believe that some level of potentially fraudulent behaviour is acceptable to get a cheaper insurance quote has risen 9 percentage points since 2013 – from 26% to 35%. Additionally, the number of drivers that believe any omission or adjustment of information whatsoever is acceptable when applying for cover has also doubled from 6% to 13% - representing more than 3 million currently insured drivers.   

The research also found that a majority of drivers (55%) believe insurers should continue to pay out on a claim even if it is subsequently shown that the information provided by the applicant was inaccurate. This figure is slightly higher than 2013 when 49% believed insurers should cover the claim when asked the same question.

The study also explored attitudes towards common types of application and claims fraud. 16% of drivers believe, for example, that it is acceptable to adjust No Claims Discount (NCD) information to achieve a better rate, whilst 12% are comfortable using someone else’s address, or changing their declared occupation or age to get a lower quote.

More than 3 million drivers comfortable with claims fraud
On the claims side, 14% of consumers say it is acceptable to report a fake hit and run to explain self-inflicted damage, 9% to exaggerate the severity of personal injuries and 8% believe that is acceptable to change places with the driver at the scene of an accident or even intentionally damage or abandon a vehicle to claim total loss.

LexisNexis experts see this finding as significant due to the fact that previous claims are one of the strongest predictors of future claims. LexisNexis found, in its own separate analysis of three insurers, that 41% of consumers who had a prior claim under-reported those claims when applying for a new policy. These consumers had claims costs that were 56% higher than the average consumer, and 34% higher than consumers with the same actual claims history who had declared information accurately.

Bill McCarthy, Managing Director, UK and Ireland Insurance, LexisNexis Risk Solutions, said “Many consumers may not even recognise that adjusting or omitting information can constitute a type of fraud. It illustrates a potential disconnect between consumers and the business of insurance. This is in itself a major challenge, but also shapes how insurers should respond to the risk of consumers providing incorrect information.”

“It also demonstrates the increasing importance of verified data, which can help manage risk effectively not only at underwriting, but also reduce the burden for claims teams. By using some of the capabilities available today such as pre-filling verified data into the application process, insurers can simultaneously improve the quotation experience for their customers, whilst subtly discouraging falsification or omission,” McCarthy said.

About LexisNexis Risk Solutions

LexisNexis® Risk Solutions harnesses the power of data, sophisticated analytics platforms and technology solutions to provide insights that help businesses across multiple industries and governmental entities reduce risk and improve decisions to benefit people around the globe. Headquartered in metro Atlanta, Georgia, we have offices throughout the world and are part of RELX (LSE: REL/NYSE: RELX), a global provider of information-based analytics and decision tools for professional and business customers. For more information, please visit. For more information, please visit LexisNexis Risk Solutions and RELX.

Regina Haas
Sr. Director, Communications
Insurance and Connected Car and Coplogic Solutions