A government insurance fraud taskforce has concluded that the industry needs to take harsher action on fraudulent and exaggerated claims – thought to cost policyholders an extra £50 per year.
“These recommendations will galvanise our collective efforts to tackle insurance fraud and will ultimately reduce costs for consumers,” said Harriett Baldwin, economic secretary to the Treasury.
Research carried out by AXA in 2013 suggested that small business owners were risking financial and criminal penalties through relaxed attitudes to insurance fraud.
The report found that one in ten SME leaders believe it is acceptable to inflate the value of goods stolen on an insurance claim.
The same survey revealed that small business owners would be 25 per cent more likely to make a fraudulent claim on their business insurance than through a personal insurance plan.
Matthew Reed, managing director of AXA’s commercial intermediary arm, warned insurers:
“If a broker does identify any client trying to inflate a claim, for example, we would urge them try to persuade them that it is in their long-term interest to do otherwise.
“After all, they not only run the risk of having any claim turned down, but also, in serious instances, risk criminal proceedings and problems getting any insurance in the future.”
However, a review into the provision of insurance for SMEs carried out by the Financial Conduct Authority (FCA) in 2015 highlighted a different view of the relationships between small firms and insurers, concluding that “the claims service is not consistently working in the interests of many small businesses.”
The report highlighted examples of loss adjusters using “tactics” and “difficult behaviour” to avoid paying out on parts of claims – including calls for unreasonable amounts of supporting information.
Linda Woodall, acting director of supervision at the FCA, said: “In an area where any delay could have a serious impact on a business or san individual’s livelihood, it is vital that claims are taken seriously and processed promptly – that means putting customers at the very heart of the process.
“We expect all firms to carefully analyse the findings of the review and make any necessary changes to their approach to ensure that SME claimants are treated fairly.”
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