Daily Insurance Industry News
Daily Insurance Industry News
Wednesday 26th of September 2018
October 22, 2007

Ombudsman warns against fronting

by Gill Montia

Story link: Ombudsman warns against fronting

The Financial Ombudsman Service is warning motorists that the insurance industry is currently rejecting thousand of claims because of a form of fraud known in the industry as “fronting”.

A common example of “fronting” would be when a young driver has a car but falsely informs his or her insurance company that a parent is the main driver.

This can reduce premiums by hundreds of pounds but can also result in claims being rejected and criminal charges.

Insurance for a young driver without any no-claims bonus can typically amount of £1,000 a year.

As a result vehicles that are in reality owned by young drivers are being registered in parents’ names and proposals completed with a parent as the main driver.

In law this method of obtaining a lower premium amounts to fraud and a young person driving with cover obtained in this way can be charged with driving without insurance.

Some online insurers are not helping matters by allowing a car owned by a young person to be insured by a parent who then puts their child down as an occasional driver.

Esure, Churchill and the Post Office allow this in their online application process, while other companies are combating “fronting” by insisting that the owner of the car and the main driver must be the same on the insurance application.

The Financial Ombudsman Service deals with between 100 and 200 fronting disputes a year, and it is estimated that the insurance industry deals with around 1,000 such cases annually.

Peter Hinchcliffe, a leading insurance ombudsman, has found that in many cases policyholders find it difficult to produce evidence to show they have not been “fronting”.

For example, if a parent is the main driver of a vehicle that has been in an accident or stolen from a son or daughter’s university town, there is a lot of explaining to do.


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