Rise in insurance fraud fuelled by cost of living crisis

A growing number of financially squeezed households are “turning to crime” by submitting bogus insurance claims, with data revealing a sharp rise in cases over the past year.

Zurich UK, one of Britain’s biggest insurers, said the cost of living crisis was fuelling the increase in insurance fraud, where people exaggerate or make up claims for items such as jewellery and electrical goods.

The company said the number of fraudulent property claims from 1 January to 31 May this year was 25% higher than in the same period in 2021.

During the five months, the insurer prevented fraud totalling £4.2m – up from £3.3m in 2021. Zurich said this equated to about £40,000 each working day.

High-value jewellery, mobile phones and TVs were among the most common items fraudulently claimed to have been lost, stolen or damaged. The average value of a fraudulent home insurance claim was £8,800.

In one case highlighted by Zurich, a cyclist aroused suspicion after making a £1,000 claim for a stolen bike minutes after buying a policy. But she was rumbled when mobile phone footage revealed the supposed thief making off with the bike 45 minutes before the cover was taken out.

In another case cited by the insurer, a DIY enthusiast attempted a £3,000 claim for the theft of his tools. Asked to provide photos of the items, the man shared a photo of himself with them, only for the date to show it was taken after the theft was alleged to have taken place. The man also claimed bikes worth £2,000 had been stolen from his garden. They were later found by police in his shed.

Zurich said many more people were facing hardship as a result of soaring bills for food, energy and fuel, which was contributing to an increase in fraudulent claims.

DCI Tom Hill, from the City of London police’s insurance fraud enforcement department, said: “We understand that the rising cost of living has made the past few months particularly hard for many people across the country – but turning to crime is never the answer.”

He added that while submitting a bogus insurance claim “may seem like a victimless crime”, it in fact pushed up the cost of premiums for all consumers.

In addition, it could leave the individual with a criminal record.

“Exaggerating or fabricating a claim for a pricey watch or television may seem like a quick way to make money, but a conviction will have a lasting impact on your life,” said Hill.