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Abstract

The ever-present threat of motor insurance fraud has been considered a problem for UK insurers since the 1970s. Inadequate responses from both insurers and law enforcement has led to catastrophic losses for the UK insurance industry. Opportunists have taken advantage of the vulnerabilities of insurers, becoming carefully disguised in amongst genuine claimants, making motor insurance fraud more challenging to detect.

Since the 2010s, framework has supported the motor insurance industry to tackle fraud by reducing awards for whiplash claims, resulting in reducing the incentive to make fraudulent claims and the legal instrument of fundamental dishonesty, which allows insurers to recover costs from dishonest claimants. There has also been cooperation between UK insurers and police, with the insurance industry funding a dedicated insurance fraud police department.

Whilst these measures have been helpful in beginning to control motor insurance fraud, they appear insufficient in mitigating fraud losses. Advocating for the widescale use of automated vehicles could be the next step in reducing insurance fraud, as they are anticipated to reduce the number of car accidents, thus reducing the opportunity for fraudulent claims. Furthermore, less human interaction with the driving experience may give insurers a better opportunity to assess risks, with human behaviours such as dishonesty and carelessness, which can result in fraud, often being unpredictable.

The vehicle’s online connectivity, however, may lead to new scams initiated remotely through cyber attacking the vehicle’s system, to engineer vehicle crashes and vehicle theft. The perpetrators of cyber-attacks on automated vehicles will be challenging to identify than the current fraudster, with no requirement to be present when the attacks occur. There is also no clear way of identifying of whether the driver was colluding with a cyber attacker in order to benefit from a successful fraudulent claim. The use of automated vehicles could, therefore, have little effect on reducing motor insurance fraud or, potentially worsen the problem and make it more challenging to detect.

Course: Counter Fraud and Criminal Justice Studies - BSc (Hons) - C1592

Date Deposited: 2022-09-21

URI/permalink: https://library.port.ac.uk/dissert/dis14030.html