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Car Insurance Fraud - Would you lie?

A Car-Insurance-UK-Supermarket.co.uk Survey

Research Report: 03 September 2011

by Donald MacKenzie

Introduction

As we have reported extensively in our blog and news sections on this website, there is considerable evidence to suggest widespread fraud among car insurance consumers both when applying for car insurance and when making claims. One survey even showed that the majority of people were in favour of so-called 'fronting' to reduce the cost of young driver car insurance; while car insurance companies, pointing to the UK's high incidence of alleged whiplash followng car crashes that is more than twice the European average, have argued that claims fraud is endemic.

More recently a large study by Confused.com (details below) suggested that drivers had become more honest in their car insurance applications although increased claims fraud has been recently reported.

We decided to ask our site users about whether they had lied, or would be willing to lie, on a car insurance application or claim, according to the following methodology.

Methodology

Because the study was completed using volunteers, we needed to make it easy to complete our questions. We therefore included a single multiple choice question beside the text on most of our pages and rewarded those that took the time to 'vote' with access to the results of the voting patterns up to and including their own vote.

An interest in these voting patterns and because it was easy to vote led to effective uptake for a survey of this type and we were able to conclude the research in under four weeks in July-August 2011.

The multiple choice question was shown on our (this) website as follows:

Optional Survey
(If you vote, you'll be shown the results)
With regard to your car insurance: (please consider all options before responding)

I have lied when applying for car insurance (A)
I would be willing to do so (B)
Both of the above
I have lied when making a claim or would be willing to do so (C)
C plus A and/or B apply
I would never be dishonest
Not sure

Respondents selected only one of these options. Voting more than once was automatically prevented.

Results

102 completed the survey with the results breakdown as follows:

Option	No. of Votes	No. of Votes
I have lied when applying for car insurance (A):	3	3.00%
I would be willing to do so (B):	1	1.00%
Both of the above:	4	4.00%
I have lied when making a claim or would be willing to do so (C):	6	6.00%
C plus A and/or B apply:	2	2.00%
I would never be dishonest:	83	83.00%
Not sure:	1	1.00%
Total:	100	100.00%

From the above, it is can be seen that 10% of respondents stated that they had lied on a car insurance application form or would be willing to do so.

8% (of the total sample) said that they had lied when making a car insurance claim or would be willing to do so.

However the majority, 83%, said that they would never be dishonest in relation to their car insurance.

One person said that they were 'not sure' (suggesting they had not ruled out a dishonest application or claim in the future).

Discussion

Our numbers for deliberate deception in car insurance are less than those reported by Confused.com that found that 14% had lied on their car insurance application form in order to reduce their premium.

Because our survey sample (of 100 people) was fairly small, our 95% confidence intervals are relatively wide with the effect that statistically our findings are equivant to a range of from 5% to 15% for those that have lied on a car insurance application, were our figures to be applied to the general population.

The Confused.com results, because their sample size was 2000, has a smaller margin of error, with 95% confidence intervals of 13-15%. Our 5-15% range, because it overlaps with the Confused.com range indicates that statisitically, our findings are not significantly different

Our study might suggest a trend towards a further reduction in those willing to be dishonest in relation to car insurance applications, however, given that our study is the most up-to-date.

Dishonesty in car insurance is now easier for the insurance industry to detect and the public may have responded with greater honesty.

New tools that the car insurance industry now uses or will soon have available to them include access to the Insurance Fraud Bureau (IFB) and Association of British Insurers (ABI) databases to check for past car insurance claims or known insurance cheats, as well as a link-up with the DVLA database to check for license points. In addition, the IFB uses powerful software to help to identify so-called 'fronting' where, typically, a parent poses as the primary driver to reduce a teenager's premium.

The findings of our study, and similar studies, would suggest that lying in car insurance applications is indeed on the decline.

Nonetheless, as our study also showed, many remain willing to lie when making a car insurance claim and our figures are consistent with the relatively high prevalence of car insurance fraud in this country. Indeed, the UK has been dubbed the whiplash capital of Europe, allleged whiplash being an easy way for a frauster to secure a compensation pay-out.

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