Last year, there were 107,000 detected fraudulent insurance claims. And the COVID-19 pandemic is a major reason for these increased fraud cases.

Businesses have more to worry about than keeping up with COVID-19 disinfecting guidelines and social distancing. Many criminal fraud solicitors will take advantage of vulnerable businesses, filing false insurance claims that will leave businesses out of money.

How can businesses keep up with insurance fraud while still abiding by safety guidelines? And what type of claims can businesses, specifically retail businesses, expect? Here’s your guide to insurance fraud management during the age of the coronavirus and how you can prevent it.

What Type of Claims Can You Expect?

Fraudsters understand vulnerability during these scary times. That means they will not only try classic insurance fraud methods but will also come up with new claims. Here’s what businesses can expect.

False Injury Claims

Fraudulent personal injury claims are rare but damaging. That's because false injury claims can set a business back by millions.

While false injury claims may still be prevalent, businesses have a major advantage. Most businesses are operating at limited capacities and enforcing social distancing. In the case of false injury claims made by employees, more staff are working from home and many employees have been laid off/furloughed.

This brings fewer people to their business, meaning these claims should be rare and easy to fight.

What if an individual does receive a genuine injury at your business? There could be a chance the individual will exaggerate their injuries. Because of this, you’ll need an effective claims handling team to fight for your business.

COVID-19 Claims

More recently, fraudsters are filing claims related to COVID-19 and a business’ approach to safety and social distancing. The main case of fraud you can expect is false sickness claims. For example, a customer may file a claim stating they got COVID-19 from your business.

There are also scams targeting individuals. For example, scams that promise individuals higher returns on their pensions. This may occur as a result of COVID-related unemployment. There may also be insurance scams related to cancelled events, such as weddings and concerts.

Motor Fraud

Motor fraud is one of the most common types of fraud. It affects many businesses, from car manufacturers to auto insurance companies.

Motor fraud falls into two categories: opportunity and organised.

In an opportunistic case, individuals find ways to exaggerate an existing claim. For example, if the individual gets in an auto accident, they can invent a fake injury or exaggerate the damage to their car.

Organised motor fraud occurs in criminal organisations. They stage auto accidents and attempt to receive cash from the settlement.

Psychological Claims

While psychological claims are rare, they can stem during the pandemic. Since businesses are facing staff shortages, existing staff members may be taking on multiple roles. This can cause stress and anxiety claims.

In addition, these may lead to overworked claims — especially if you’re not providing paid overtime.

While these claims may not always be fraudulent, they’re more difficult to prove on both sides.

Why Are False Insurance Claims Occurring During the COVID-19 Pandemic?

Insurance scams occur during all types of hardships. That’s because claims volume increases during economic issues. Similar scams also occurred between the years of 2008 and 2009, where the UK suffered a severe economic crisis.

The same thing is happening during the COVID-19 pandemic. This study states that the UK will be one of the last countries to recover from the pandemic. The UK not only faces weak business investments and rising unemployment, but also the economic effects of Brexit.

Rising unemployment will also give way to an increase in fraudulent insurance claims. With few job openings, unemployed individuals will look for opportunities to earn money — even if these methods are illegal.

Those who are employed may also fake a workplace injury or blame their COVID-19 diagnosis on their place of work to receive compensation and safeguard themselves from losing their job.

How to Prevent a Fraudulent Claim

What can businesses do to protect their finances and reputation? In the case of fake COVID-19 diagnosis claims, businesses must comply with all safety and social distancing measures. Equipment must be properly maintained and employees need access to PPE.

If your business is facing lay-offs, don’t put pressure on existing employees. If employees are stressed and working more hours, this may give way to more issues such as auto accidents.

Other Ways to Stay Proactive

While the advice mentioned previously may be easier said than done, there are easy ways for businesses to stay proactive and prepare themselves for a possible act of fraud. Here are a few examples.

Seek Risk Assessment Services

Because of the possible vulnerabilities, risk assessment is no longer an option. More risk assessment companies offer COVID-19 services, providing documentation and other materials to help businesses stay compliant.

Claims handling is also necessary if you receive any potentially fraudulent claims.

Keep Accurate Documentation

In case a fraudulent claim arises, expert documentation may help you win your case. This includes staff training, the COVID-19 protective measures you put in place, proof you follow all government guidance and list the equipment you have available to staff members.

Maintain Regular Accident Reporting

In case there is an accident at your workplace, whether it be an employee or a customer, make sure you report this accident. This also includes if there’s a potential COVID-19 outbreak at your place of business.

Prevent Insurance Fraud With Effective Risk Assessment

UK businesses are facing many vulnerabilities with the COVID-19 pandemic. This can attract different types of insurance fraud. Rather than not taking action, you can seek risk assessment services to patch up any weak spots and seek claims handling if you receive a potentially fraudulent claim.

Gallagher Bassett is your premier source of innovation in risk and claims management. We work with businesses as well as insurance companies to ensure you’re not a victim.

We not only aim to help but strive to have long-standing relationships with clients. Contact us today to request a consultation.