Today, Línea Directa has published its VI Car insurance fraud Barometer, a report that has analyzed the possible cases during 2019 and 2020. In 9 out of 10 cases, the insured declare more damage than has actually occurred.
The insurance company Línea Directa has been analyzing fraud against insurance companies since 2009; something that he makes public in successive reports entitled ‘Insurance Fraud Barometer’. The company has just published the sixth of these studies, whose main conclusion is a 21% increase in fraudulent reports (in car insurance) in 2019 and 2020 compared to 2017-2018. The cause of this growth? Largely, the economic crisis due to Covid.
To carry out this study, which also analyzes fraud in the home insurance sector, Línea Directa has studied its policy portfolio: nearly 2.5 million insured vehicles and more than 700,000 homes. Likewise, and to press the opinion of the Spaniards on the subject, it has carried out a telephone survey of more than 1,700 people.
And beware of an important fact, since 40% of those surveyed are unaware of the legal and criminal consequences of insurance fraud, which is considered a crime of fraud and can be punished with the payment of a daily fine (the amount will be imposed by the judge) for a period of up to twelve months , but also with prison sentences of up to six years.
The results of the study are clear. From the outset, and always with respect to the last Barometer, corresponding to 2017 and 2018, Línea Directa has detected more than 65,000 fraud attempts in car policies and 9,000 in home insurance in 2019 and 2020. That means, in the field of car insurance, 6.3% of fraud attempts, a figure that represents an increase of 21% compared to the index of 5.3% points corresponding to 2017 and 2018.
But, Interestingly, the average amount of each case of car insurance fraud, 1,130 euros, has decreased by 13% compared to 2017 and 2018; when the average amount reached 1,296 euros.
It must be taken into account that car insurance is the one in which the most fraud is committed (66% of all those related to insurance) and that, within this area, up to 73% of the fraudulent cases are presented by the insured, compared to 21% presented by the opposite party. Of the remaining 6%, 3% of fraud is committed by mediators; 1%, repairmen; and the remaining 1% other possible implicated.
Covid, cause of the increase in fraud
The growth in fraud cases during 2019 and 2020 has a clear explanation. And it is that according to Direct Line, more than 55% of those users who tried to carry out fraud against the company did so “as a result of the pandemic”.
The economic crisis derived from the pandemic gains even more strength as the main cause of the increase in fraud when learning that the typical user who tries to commit this crime is a young man, between 18 and 24 years old, who has a precarious job or who has lost it. Although, with the arrival of the pandemic in 2020, the insurer owned by Bankinter has detected another typical profile; that of a man over 40 years old with an economic situation that has been affected by the pandemic.
In addition, the days with the most fraud attempts are Mondays and Tuesdays: according to Mar Garre; director of the Fundación Línea Directa; frauds are usually committed during the weekend, “when there is more time to prepare them” and are reported at the beginning of the next. By months, those in which more fraudulent cases are declared are May and June.
The fraud map in Spain
By type of car insurance fraud, 11.6% of these crimes focus on bodily harm (in all of them, injuries are feigned or greater importance is declared); while 88.4% are related to material damage. In this area, 88% of the frauds “are attempts to include damages that are not from the accident in the parts”, they point out from the Fundación Línea Directa.
Furthermore, fraud attempts in Spain differ quite a bit from one region to another. A) Yes, the provinces in which a higher rate of fraudulent cases have been registered are Cantabria, Cuenca and Malaga; while those in which fewer attempts of this type are carried out are Soria, Teruel and Palencia.
Organized mafias, a problem for insurers
Beyond the particular fraud, one of the main problems for insurance companies is the existence of mafias specialized in insurance fraud. And it is not a minor problem since, since 2009, Línea Directa has identified more than 700 of these mafias. In 2020, the insurer identified 74 of these organizations, about 40% less than the 111 identified in 2019 and a decrease that the insurer attributes to “logistical difficulties caused by confinement and mobility restrictions.”
But The most important thing about the actions of these mafias is that they focus on personal injury cases, “those in which, due to compensation, the average cost per claim increases the most”Garre points out. Thus, these mafias simulate disasters that never occurred or, worse, plan real accidents; whose average cost in compensation it shoots up to 7,500 euros, that is, 6.6 times more than fraud committed by individuals.
Curiously, the action of the mafias is very localized in Murciawhere the rate of fraud carried out by mafias is up to 6 times higher than the rest of Spain.
The opinion of the Spanish on fraud
Despite the fact that cases of fraud harm all users due to the increase in the price of policies, according to the survey carried out by the Fundación Línea Directa, up to 26% of Spaniards would commit fraud “if they knew they were not going to be discovered” and 37% consider it “justifiable in some case”. In addition, 51.5% of those who have committed it at some time “do not regret it” and 13% do not do it “at all because insurers make a lot of money”. Faced with these opinions, 63% of Spaniards consider that it is “a crime against all” and “the Law must be applied”.