Insurance Customers Warned Of COVID-19 Investment Scams

By Lucia Osborne-Crowley
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Law360, London (June 1, 2020, 4:55 PM BST) -- A fraud expert representing British insurers on Monday added to warnings that consumers must be on guard for a spike in insurance fraud as scammers try to take advantage of heightened financial anxieties amid the COVID-19 pandemic.

The Association of British Insurers, a group representing the sector, said in a blog post Monday that insurers must not allow their focus on the scope of different types of cover in regards to COVID-19 distract them from the increased risk of fraud during the outbreak.

Mark Allen, fraud and financial crime manager at the ABI, said both consumers and insurers face the risk of COVID-19 related scams.

"Highly mobile and sophisticated unscrupulous people inevitably look to exploit the pandemic, by preying on people's anxieties," Allen said.

Allen noted that having people in lockdown across Britain has given fraudsters a "captive audience with which to offer bogus insurance and high-risk investment and pension products, through cold calling, automated texts and various social engineering techniques."

COVID-19 related scams could come in the form of con men pushing rogue investments with "guaranteed" high rates of return to savers worried about how the pandemic will affect their pensions. They could also emerge in the form of so-called ghost broking — a practice in which scammers pretend to be legitimate insurers or brokers and falsely offer travel or business interruption insurance to cover consumers during the pandemic.

"Insurers themselves face potentially fraudulent claims, both from fraudsters seeking to exploit the pandemic directly and from policyholders who may invent or exaggerate claims to offset financial hardship," Allen said.

Allen also noted that the incidence of fraud hits its high point later in the crisis rather than earlier, as fears of acute danger are replaced by long-term financial anxieties.

The blog added that the amount of fraud will also be influenced by consumers' perceptions about insurers during this time. It warned that insurers should take steps to keep their customers informed about the risks of becoming a victim or a perpetrator of fraud.

So-called ghost broking, one of the forms of fraud Allen has warned about, has been top of mind for law enforcement during the pandemic. Police in London arrested a man last week accused of selling fake car insurance online and targeting National Health Service workers amid the COVID-19 pandemic.

The Insurance Fraud Bureau said last month that so-called crash for cash scammers — who cause accidents and persuade the other motorist that they are at fault — may surge as drivers get back behind the wheel as lockdown restrictions are relaxed.

Britain's Financial Conduct Authority has also warned consumers of the potential for COVID-19 to encourage financial crime, and urged savers to be careful when making investment decisions.

--Additional reporting by Martin Croucher. Editing by Rebecca Flanagan.

For a reprint of this article, please contact reprints@law360.com.

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