AA says fraudulent claims may put up insurance rates by 50%

0
332

Even as the overall vehicle crime rate in the U.K. has fallen by about 16 % since the last report, the rates for car insurance showed the greatest increase in sixteen years during the period from April to June this year.  The reason for the increase is directly related to fraudulent claims from insured motorists, according to the AA British Insurance Premium Index.

Edmund King, president of AA, noted several contributing factors in the substantial increase in insurance rates.  He said that consumers are providing false information, especially on applications via the internet, where it is easier to manipulate background information in order to obtain lower rates.

Also, he said that a lot of motorists are making fraudulent claims of personal injury and vehicle damage, in many cases actually ‘staging’ an accident where they claim reimbursement from their insurance company.

A survey taken last year suggested that a large percentage of drivers had considered making bogus claims because of hardship due to the recession.

The Association of British Insurers (ABI) said last week that the cost to insurance companies of fraud in both motor and home insurance policies and claims had risen by an estimated £1.9 billion a year, with a resulting average increase to policy-holders of around £44 per annum.

Simon Douglas, director of AA Insurance, noted that some estimates indicate insurers actually paid out about 20% more than they received in premiums during the past year.  He said he would not be surprised if rates overall rose as much as 50% by the end of 2010.

LEAVE A REPLY