Councils warned over rise in fraud as fake pothole claims treble

Fraudulent claims against councils for pothole damage climb by 238%. Cost of living drives surge in opportunistic fraud, warns Swindon-based insurer Zurich Municipal. Overall fraudulent claims against councils climbs by 18%.

Local authorities are facing an influx of fake pothole damage claims as the cost of living crisis drives a rise in fraud.

In 2022 local authorities saw a 238%[1] increase in pothole related vehicle damage claims, according to Swindon-based leading public sector insurer Zurich Municipal. Claimants either falsely alleged that their vehicle had been damaged as a result of hitting road defects, or fraudulently exaggerated their claims.

An increase in extreme weather conditions caused a rise in the number of road defects last year, leaving greater room for opportunistic fraudsters to falsely claim potholes were responsible for existing damage to their vehicles. Zurich is warning local authorities to be vigilant as the cost of living crisis continues to drive up opportunistic fraud.

Overall, in 2022 the insurer detected 571 fraudulent claims made against councils worth £16.2m. This represents an 18% increase on the previous year, with the value of detected frauds increasing by 68%.

While the picture varies around the country, some 22% more casualty frauds[2] were detected over the period, with a 74% increase in the value of frauds identified[3]. These increases were driven by both the impact of the cost of living and the strengthening of Zurich’s anti-fraud measures.

Most casualty frauds (72%) were public liability claims, often relating to slipping or tripping incidents on publicly owned land. These claims include contrived slip and trips, where the alleged incident never took place, fabricated claims where the injury may have been genuine but was not caused by the alleged accident, and exaggerated claims.

Scott Clayton, Head of Claims Fraud at Zurich UK, said: “It’s vital that local authorities take the current heightened fraud risk seriously. While the cost of fraud against councils ultimately impacts the public purse, there are also significant social costs, including the funding of organised crime and costs to the judicial system.

“Despite the heightened risk, Zurich has strong controls in place to detect and investigate fraud. Our 62-person fraud team continues to invest in the very best technology, tools, and resources to identify suspect claims and get the best results on our investigations, and we have provided fraud awareness training sessions to hundreds of Zurich Municipal customers over the past year.”