36,000 Parents claim kids as spouse to cut insurance costs.
An estimated 36,000 parents are committing fraud by illegally putting their sons and daughters down as a spouse or partner on their car insurance policy a crime known as fronting according to online insurer swiftcover.com.
swiftcover.com says that one in four policy holders it contacted over concerns with their motor insurance admitted they had put down their son or daughter as a spouse or partner instead of as a named driver, claiming it was a mistake however, the majority then chose to cancel their policy and seek insurance elsewhere rather than pay a higher premium.
These figures would indicate that of the estimated 24million motor insurance policy holders in the UK, at least 36,000* are committing the same fraud. swiftcover.com says the number of customers fraudulently passing off a son or daughter as a spouse or partner has almost doubled in the last two years.
Robin Reames, claims director for swiftcover.com, warns that insurers are cracking down on suspected fronters. He says: Trying to buck the system by fronting is not only illegal, it actually ends-up costing law-abiding motorists if they are involved in an accident with a fronted driver who is actually an uninsured driver.
Fronting is where an older driver is insured as the main driver of a vehicle, but the vehicle is actually driven primarily and often owned by a much younger driver, who is then usually added to the policy as a named driver to bring down the cost of their insurance cover. But passing the younger driver off as a spouse or partner can reduce insurance costs even further.
Based on its own review of policies, swiftcover.com says the wider problem of fronting is even bigger, and the company reckons that at least 150,000* drivers every year are purposely misleading their insurers.
Reames continues: The expense of uninsured drivers and fraud is pushing up the cost of insurance premiums for everyone so parents who think they are helping by fronting for their children are both breaking the law and making car insurance more expensive for everyone else. We understand that insurance is costly for younger drivers, but premiums reflect the number of claims they are involved in and therefore the level of risk they pose.
swiftcover.com says insurance companies share information between themselves and other agencies to help spot the tell-tale signs of attempted fraud. For example, older policy holders who add a spouse or partner who is much younger are likely to have their insurance reviewed and face additional checks.
And whilst it is not illegal to have a younger named driver on a policy, drivers insuring multiple cars usually three or more, and probably with different insurers might also be asked to prove that they are indeed the main driver for all the vehicles insured in their name. In addition, insurers are investigating claims in more detail and could reject a claim when fronting is suspected.
If fronting is proven, the younger drivers insurance policy will be invalid, so not only will the driver face a fine and penalty points for driving without insurance, any insurance claims they have made will be rejected, leaving them out of pocket and possibly facing further legal action from third parties involved in an accident.
Furthermore, anybody caught fronting both the younger driver and the older driving committing the fraud will face much higher insurance premiums in the future and may even be turned down by many insurers.
*swiftcover reviewed more than 4,000 policies in 2009 following concerns about fronting, out of a total 720,000 in force policies. Of those reviewed, more than 1,100 admitted they had put a son or daughter on their insurance policy as a spouse or partner.
Notes to Editors
For press enquiries please contact:
Joshua Van Raalte or Paul Beadle
Brazil (PR agency for swiftcover.com)
01865 556 000
Based in Cobham, Surrey and employing over 800 people, www.swiftcover.com started trading in June 2005 and was born out of a desire to revolutionise the general insurance market.
swiftcover.com offers car, travel and pet insurance online, and is Britain’s only insurance company without call centres, which means that the cost savings can be passed directly onto the customer and premiums are kept low. In 2008 swiftcover.com featured as the cheapest insurance quote on the comparison website moneysupermarket.com more often than any other insurer.
This powerful operating model combined with successful marketing and competitive pricing has proven to be a tremendous success. In 2008 swiftcover.com achieved over half a million live policies and in May 2009 sold their one millionth policy. They are considered to be the fastest growing insurer in the UK.
In 2007, AXA UK acquired swiftcover.com. It is now a wholly owned subsidiary of AXA Insurance UK PLC which forms part of AXA Group.
AXA UK is a part of the AXA Group. AXA is a world leader in financial protection. AXAs operations are diverse with major operations in Western Europe, North America and the Asia/Pacific area. AXA employs 120,000 staff and tied agents and, as of June 30 2006, had 1,091 billion in assets under management. AXA reported total IFRS revenues of 72 billion and IFRS underlying earnings of 3,258 million for the full year 2005. Our previous company performance is not a guide to how we may perform in the future.