The punishment for insurance fraud in the UK

The punishment for insurance fraud in the UK is severe, yet false claims are a growing issue that continues to impact our country.

According to the ABI (Association of British Insurers), fraudulent claims across the UK rose by 16% in 2023. This led to the creation of a new Insurance Fraud Charter, which aims to identify loopholes in the market and improve collaboration between insurers and the Criminal Justice System.

Making false claims on a jewellery insurance policy, in particular, can be tempting to potential fraudsters. High-value jewellery is among the most common items that feature in a false insurance claim.

The City of London Police Department even reported that opportunistic insurance fraud has risen as much as 61% in recent years, including false claims from people trying to claim twice for lost or stolen jewellery.

However, due to insurance companies' diligence, an insurance scam is detected every five minutes in the UK, which equates to around 300 per day.

Before we look at the punishment for insurance fraud, let's first cover what insurance fraud is.

What is insurance fraud?

Insurance fraud is intentionally deceiving an insurance company for your financial benefit. This usually occurs during the application or claims process when someone applying for insurance or making a claim deliberately provides misleading information to gain a payment or discount they are not eligible for. Let's look at these false insurance claims and the consequences of lying to an insurance company in the UK.

Examples of insurance fraud

Insurance fraud is a serious crime that has increased in recent years. Fraud methods can vary, from exaggerating a claim to intentionally providing false information when applying for cover.
However, as fraudulent insurance claims have become more detectable, the consequences have become harsher in a bid to 'crack down' on insurance fraud. Take these high-profile examples:

• In High Wycombe, Mahmood Khan claimed over £40,000 of jewellery was stolen from his home during a burglary. It was later discovered that the 44-year-old had hidden some of the items, including a diamond ring, in a suitcase. He was sentenced to nine months in prison, fined £9,000, and ordered to pay an additional £1,000 in compensation.
• In Milton Keynes, 28-year-old Daniel Silver falsely claimed for a £6,150 Rolex watch, stating he’d lost it in a sunbed shop. But the insurer caught him out using intelligence they’d gathered from an investigation, and he was given a 12-month community order of 200 hours of unpaid work.

As you can see, the UK's punishment for false insurance claims is severe and not worth the risk.

Reasons for making fraudulent insurance claims

Scenarios like the ones above show just how prevalent fraudulent jewellery insurance claims can be. But why do people do it when they face a criminal record, prison time and hefty fines?
Let’s look at the main reasons behind making bogus insurance claims.

1. Opportunity

When given the opportunity, many people may lie to benefit more from a situation.
Jewellery insurance fraud is a common example of this. For instance, if something happens to your wedding ring—perhaps it’s stolen—you might decide to lie about its value, claim twice through different insurers, or even lie about what was stolen in the first place.

This way, you might be able to get more money from the insurer, having misled them on the item's true value.

2. The cost-of-living crisis

Fraudulent claims are on the rise, partially due to poor economic conditions that create uncertainty and desperation. Tough times can cause people to commit crimes to earn extra cash. With a decline in real wages and sluggish financial growth, it's no surprise the practice is becoming more common.

3. People believe fraud is a 'harmless' crime

Some people believe insurance fraud is a 'victimless' and harmless crime—a guilt-free way to make extra cash. This leads us onto the impact of insurance fraud.

Fraudulent insurance claims affect everyone

Insurance fraud is a very serious crime that impacts society at large.

Valuable public resources and law enforcement agencies have to dedicate their time to tackling fraudulent crimes when this time could be spent elsewhere.

For someone to make a false theft claim on their jewellery insurance, they would need to report the crime first and have evidence of this. This is a waste of police time when they could be focusing on real crime in your community.

Fraud can also affect upstanding policyholders, who are forced to pay higher jewellery insurance premiums because the costs of these bogus claims are consequently passed on to customers.

Therefore, everyone loses out, and everyone can be a victim of fraud.

How insurers are tackling fraudulent insurance claims

Given the scale of the issue, it's no surprise that insurance companies are coming down harder on fraud.

Many have created new ways to improve detection, which has resulted in a rapid increase in the amount of fraud exposed.

With insurers using new state-of-the-art technology, sharing databases, and with fraud specialists now on speed dial, one insurance scam is detected every five minutes in the UK.

Insurers also work closely with their local police department to report insurance fraud to ensure fraudsters are caught. In 2024, the City of London’s Insurance Fraud Enforcement Department (IFED) carried out a two-day operation at Heathrow Airport after receiving intelligence that high-value watches linked to insurance fraud were being taken overseas via airports to be resold.

The police were then able to work with the UK Border Force to identify high-value watches in passengers' possession and check if they were linked to insurance fraud via The Watch Register. According to The Watch Register, one in ten watches on its database is linked to insurance fraud.

Insurance fraud punishment in the UK

To eradicate the threat of fraud, most insurers take a strict zero-tolerance approach when they catch someone out. Cases are more regularly reported to the police for investigation, who have also started to adopt a tougher attitude towards insurance fraud.

If prosecuted under the Fraud Act 2006 (and depending on the severity of the crime), fraudsters may face:

• up to 10 years’ imprisonment
• fines or having their assets seized
• a criminal record
• being unable to buy insurance or other essential financial services

In addition, insurers are urging people to help reduce crime rates by reporting fraudsters and supplying information on suspected insurance fraud.

How to report insurance fraud

If you believe someone is committing insurance fraud, you can report it through the Insurance Fraud Bureau (IFB) or Action Fraud websites. Alternatively, if you would like to speak to someone directly, you can call them on 0800 4220421 and 0300 1232040, respectively.

If you wish, any information you provide can be kept anonymous. The IFB or Action Fraud can then share your report with insurers or the police for further investigation.

Our approach to combating insurance fraud

We've examined the impact of fraudulent jewellery insurance claims on society, individuals, and the perpetrators themselves, and the risk certainly outweighs the so-called benefits.

However, with anti-fraud strategies so widespread now, it's important that honest policyholders feel assured that they can still make successful claims on their insurance and get the outcome they deserve.

At Ripe, we have an open and honest relationship with policyholders. We want to ensure that honest, law-abiding policyholders know that we take insurance fraud very seriously.

Action will be taken when we feel it is necessary. Stopping fraud benefits everyone, so we'll continue to use all the tools available to ensure Ripe remains at the forefront of tackling insurance fraud.

Specialist valuables insurance through Ripe

At Ripe, we arrange specialist jewellery insurance with worldwide cover up to £30k. You can even build your own policy, so you'll never pay for cover you don't want or need again.

Find out more about specialist jewellery insurance available through Ripe, or get a quick online quote today.