The government’s efforts to tackle fraudulent motor claims has left the door open for fraudsters to move into organised casualty fraud, with claims nearly tripling in the last five years, according to insurance and risk law firm BLM.
This has had dramatic repercussions on the insurance industry, with fraudulent claims costing insurers nearly £350m, and instances rising from 7,403 in 2010 to just under 20,000 in 2014.
Research conducted by BLM, in conjunction with the Institute of Directors, suggests that, in addition to government policy, the rise in fraudulent claims is brought about by a range of economic factors, including increased migration, improving technology and medical science and the rise in retirement age.
BLM’s report also highlights the potentially huge impact that economic trends could have on the wider casualty insurance sector, with technology identified as one of the key catalysts of future claims both commercially and domestically.
In particular, with the government committing £740m to developing the Internet of Things (IoT) in 2015, projections suggest that there will be 26 billion connected devices by 2020. As a result, the manufacturing of everything from smart TVs to coffee machines will come under greater scrutiny, creating a significant insurance risk for both businesses and individuals.
Sarah Hill, partner and head of fraud at BLM, said: “With the government placing such emphasis on tackling fraudulent motor claims in recent years, criminals have adapted their approach since 2010, switching their intention to the casualty market and pushing claims through the roof.
“Advances in technology have also proven to be a double-edged sword. While the Internet of Things (IoT) is hailed as enabling new types of working, and promises to disrupt our home lives, it is also set to cause issues from quality control in manufacturing to employers’ health and safety regulations.
“All of these represent significant risks to insurers at present, and it is imperative that companies look at all avenues to alleviate this pressure, from supporting their employees with ergonomic equipment to familiarising themselves with the latest health and safety regulations.”