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False insurance reports rise 21% in times of covid

Networks that simulate accidents to launder money from drug trafficking, mafias that pretend to run over cyclists, artists that they claim thousands of euros while performing in theaters, or modest athletes claiming permanent disability while doing jogging in public parks.

These are some of the cases that the specialists at Línea Directa Aseguradora have managed to unmask during the last two years and that are part of the “VI Barometer of Fraud in Car and Home Insurance”, which analyzes almost 75,000 fraud attempts uncovered by the company in both branches in the last two years. The report, the oldest and most complete in the insurance sector, breaks down the evolution of the phenomenon of insurance fraud in the last 12 years (2009-2020) and analyzes the activities of organized mafias.

The main conclusion of this new installment of the Direct Line Barometer is clear: COVID-19 triggers car insurance fraud, since the frequency, that is, the proportion of false parts, rose by 21% in 2020 despite the confinement and mobility restrictions. This circumstance places the fraudulent reports at the maximum of the entire historical series, since, at the end of that year, seven accidents out of 100 were false.

But it’s not all bad news: there is more insurance fraud, but for less than on other occasions. In fact, in the last two years as a whole, the percentage of scams in the Auto industry reached 7% compared to 5.7% in the previous Barometer (2017-2018), but the costs of fraud dropped significantly, reaching 1,130 € per case (-13%), something characteristic of times of recession.

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The most common scam occurs in car insurance and it is usually carried out by young men with precarious jobs that try to include in the part damages unrelated to the claim, generally material. On the other hand, more than half of the people who tried to deceive the company during the last two years, affirm that they did so because of the economic situation generated by the COVID-19 pandemic (55%).

According to Mar Garre, Director of People, Communication and Sustainability at Línea Directa: “The economic situation generated by the pandemic has triggered attempts to scam insurance, taking it to all-time highs in both the Auto and Home Lines. For this reason, it is important to remember at this time that this type of fraud is paid for by all the insured, since, in addition to making policies more expensive, it can be connected to very serious crimes and very dangerous organizations.”

Organized networks, in trouble

The confinement experienced from March to May 2020 put organized insurance fraud networks in serious trouble, since their activities were affected due to logistical and movement difficulties. In this sense, Línea Directa identified 74 mafias in 2020 and 111 in 2019, figures far from the 123 registered in 2018. All in all, the company has uncovered the activities of almost 700 gangs in less than a decade.

These networks are usually of two types: those that simulate accidents and those that cause them involving innocent third parties. They usually present a highly hierarchical structure and a leadership made up of two or three ringleaders who focus on claiming compensation for personal injury due to its greater amount, seven times higher than other fraud attempts. This would explain why, on average, the costs of network scams are almost seven times higher than the usual scams. His modus operandi It is usually the so-called “carousel fraud”, in which these organizations successively defraud different insurers.

More fraud in the south

Línea Directa has also updated its Map of fraud in Spain, through the analysis of the more than 65,000 frauds detected during the last two years in its portfolio of the Automobile Branch, which has more than 2.5 million insured cars.

According to the results, the fraud of individuals is located in the south of the country, since, in addition to Murcia, five Andalusian provinces are among the top 10. But this reality has nuances, since, in this edition, it has also rebounded in some areas of the north. In fact, Cantabria (9.4%) heads the ranking of this VI Barometer, followed by Cuenca (8.6%) and Málaga (7.6%), all of them well above the national average, located at 6 .3% of the parts. The provinces in which there have been fewer insurance fraud attempts in the last two years are Soria (2.9%), Teruel (3%) and Palencia (3%).

Regarding the mafias, Línea Directa has established a ratio between the number of organized networks detected during the last two years and the population of each Community measured in millions of inhabitants. The resulting ranking is led very prominently by the Region of Murcia, followed at a great distance by Andalusia and the Basque Country.

Home, more fraud than expected

Línea Directa has also wanted to analyze in the Barometer the fraud committed in the Household Branch, a business in which it has more than 700,000 insured homes. In this sense, the proportion of fraud in this sector has increased very moderately, going from 2.4% in the previous study to 2.5% in the current one. However, 2020 has marked an all-time high, with 2.7% of fraudulent parties, confirming the escalation of fraud in this business.

Regarding the average cost, the amount reaches €687 per false part, 12% less than in 2018 and almost 40% less than in car insurance, something understandable considering that these frauds focus more on the material damage. Refering to typologystaging or simulation of accidents are the most common fraud attempts in home insurance (38%), followed by the declaration of damages produced before contracting (22%).

What do the Spanish think?

To complement the study, Línea Directa wanted to press public opinion on this issue, with some surprising revelations, since more than 3 million Spanish drivers acknowledge having knowingly given false information to the insurance. The reasons they allege to lie? The economic situation, the culture of deception that exists in Spain, which makes it less objectionable, and insurance prices.

In any case, although the majority of Spaniards disapprove of insurance fraud (63%), 37% justify it in some cases and more than half of the people who have lied to their companies in the last two years (51% ) He doesn’t regret having done it. Especially striking is that three out of four Spaniards would be willing to report another person who commits fraud against the insurance company in exchange for an economic benefit.

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