The Insurance Fraud Bureau (IFB) reports its analysis has identified over 17,200 motor insurance policies displaying signs indicative of policy fronting. The IFB has passed these findings to the affected insurers for them to investigate.
The IFB used its software to conduct the fronting analysis exercise, which also extended to identifying insurance claims made against the policies which displayed indicators of fronting. That claims data has also been given to the affected insurers.
In a fronted insurance policy the named driver is in fact the main driver. Fronting occurs when an insurance consumer takes out a motor policy in their own name and adds a named driver who would normally, when taking out insurance in their own name, attract a rather higher premium. Typically, fronted policies will involve parents insuring their children as named drivers in order to reduce the cost of insurance cover.
Deliberately misleading an insurance company when applying for, making changes to and or renewing an insurance policy, amounts to fraud.
In the event that the driver of a fronted policy is involved in an accident, both the policyholder and the driver could be open to additional costs, penalties, fines and – potentially – prosecution. Where it is proven that a policy has been ‘fronted’, insurance companies can refuse to pay out damages to the ‘insured’ vehicle and may look to recover third party claim costs from the policyholder or driver.
Earlier this year the Motor Insurers’ Bureau reported young drivers remained the age group with the highest proportion of insurance claims, accidents and fatalities on our roads, and this can be reflected in motor insurance premiums. Well meaning parents may consider fronting an insurance policy to try and save money, but it is false economy as those that try to cheat the system by declaring false information could find that their insurance is invalid when they actually need to make a claim on their policy. Fronting is not only illegal, its false economy, as it ultimately ends up costing honest motorists if they are involved in an accident with a ‘fronted’ driver, who is actually an uninsured driver.
Nick Starling, Director of General Insurance and Health at the Association of British Insurers, said: “The vast majority of people who claim are honest, but insurers are determined to intensify their crackdown on the fraudulent few. Honest customers should not have to pay for the cheats. Anyone making a fraudulent claim stands a very good chance of being caught, collecting a criminal record and having problems in getting future insurance.”
Glen Marr, Director of the IFB comments: “The insurance industry is rightly intolerant of all forms of fraud, with the cost of fraud adding on average approximately £44 to every premium paid by honest insurance consumers each year. Genuine consumers and insurers should not have to subsidise the actions of fraudsters.
“The industry has the sophistication and capability to identify not only individual fraudulent claims and organised fraud rings, but also fraud when insurance policies are applied for and renewed, to include instances of fronting.
“There is also evidence of public intolerance to insurance fraud, with the IFB Cheatline continuing to receive daily reports of all types of insurance crime and not just specific to fraudulent claims”.
Source : IFB Press Release
