£2.5million. Every day. That’s the value being paid out by insurers for escape of water claims according to the Association of British Insurers. And with a 50% increase in the cost of escape of water claims between 2015 and 2018, it’s never been more important to be able to spot a fraudulent claim. The majority of claims are genuine. However, Jensen Hughes have estimated that escape of water claims represent approximately a one in eight fraud opportunity.
Escape of water claims fraud can be both domestic and commercial, and the existence of national fraud rings, making claims under commercial policies to multiple insurers, demonstrates the potential scale of the problem to the industry. So, if you’re an insurer, what are the key fraud indicators that you need to watch out for, both when a claim is submitted and during an on-site investigation? At BLM, we are regularly involved in advising insurers on escape of water claims and helping them navigate the claims process where fraud indicators are present.
Building on the best practice we developed in conjunction with Zurich and based on our experience, we’ve created our Key fraud indicators for Escape of Water Interactive Tool to help insurers identify where insurance fraud might be present. We highlight key indicators of fraud and questions that insurers should consider when dealing with an escape of water claim. The tool also provides further guidance on what to look for and why it may indicate fraud.
If two or more of the indicators apply to a claim, or if you are in any way suspicious or concerned, we recommend fully profiling and assessing that risk through a rigorous due diligence process. This will help ensure that honest policyholders are paid quickly, whilst bespoke investigations are carried out where cases warrant further validation.
The number and cost of claims are rising, and are extremely expensive for insurers. We need to work together to tackle fraudulent claims and prevent the rising levels of falsified and exaggerated escape of water claims.