Car insurance: companies like Allianz warn of fake claims as tech enables fabrication - will it affect quotes?

Insurers have voiced concerns regarding the use of fabricated and altered photos in claims. Industry experts say that some people are attempting to make claims for incidents that may not have occurred in the first place by utilising advances in technology. Technology now makes it possible for fraudsters to falsify registration numbers, damage or supporting documents where previously they may have physically staged a "crash-for-cash" incident on the road. In some cases, the cars themselves might have already been written off.

Scott Clayton, head of claims fraud at Zurich UK, said: “Just as we use technology to help us detect fraud, dishonest people are increasingly using technology to try to get us to pay out for something that may not even have happened.

“This is a pocket of activity that is definitely growing. Technology has got more sophisticated in recent years, which is creating new opportunities for people or groups to submit fake claims.

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“This means that we, as insurers, have to keep up with technology and be alive to some of the new and emerging ways that people will try to make fraudulent claims.”

Insurer Allianz recorded a 300% jump in incidents where apps were used to distort real-life images, videos and documents between 2021-22 and 2022-23.

Matt Crabtree, head of financial crime intelligence and investigation strategy at Allianz, said: “There is some fantastic technology out there, which is making our lives so much better in many ways.

“However, the sad reality is that fraudsters are using this same technology for their own illegal purposes and to target innocent members of the public to make a profit, with total disregard for the impact to the victim.

“Although insurance fraud is evolving all the time, so are our robust controls and systems, which are designed to spot emerging trends. Our highly trained investigators then root out those who are trying to exploit the system, in order to protect honest customers and keep costs down.”

Insurance giant Aviva said that one of its investigators had stopped a theft claim in its tracks following suspicions around an image of a watch, valued at more than £20,000.

While conducting in-depth checks, she found an image online of an identical watch, reading the exact same time to the second. Aviva subsequently declined the claim.

In general, Aviva uncovered more than 9,250 instances of fraud in 2022, saving £120 million in bogus payouts.

The insurer has previously identified signs that organised whiplash fraudsters were moving away from motor injury fraud and into fraud related to the repair and replacement of damaged vehicles.

How could it affect quotes?

Insurance costs have jumped during the cost-of-living squeeze, with insurers facing their own cost pressures from rising charges for repairs, raw materials and replacement vehicles.

Read more: Why has car insurance gone up - and cheap insurance tips

According to recent figures from the Association of British Insurers (ABI), the average price paid for comprehensive motor insurance was about a third (33%) or £157 higher in the first quarter of this year than a year earlier.

A rise in technology-aided car insurance fraud could have several implications for claims and rates in the future.

As fraudulent claims increase, insurers may experience higher claim payouts, leading to increased costs which could potentially result in higher premiums for policyholders to offset these losses.

Insurers may also need to invest more resources in advanced fraud detection technology and personnel to combat the rising tide of fraudulent claims which could lead to longer processing times for legitimate claims as insurers scrutinise them more closely.