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Fraudulent insurance claims now top £4 million a day finds trade body.

Fraudulent insurance claims are now costing insurers and honest customers over £4 million every day, according to figures released by the Association of British Insurers (ABI).

Initial findings from ABI research estimate the annual cost of insurance fraud natinally to be a staggering £1.6 billion! The survey found that one-in-ten adults admitted to having cheated on their insurance. The organisation has been quick to point out that these cheats are not only commonly detected but - when they aren't - the price of their fraud is to push up the cost of insurance for everyone else, adding nearly £40 to the average premium paid each year by honest policyholders.

Key findings of the survey of nearly 7,000 adults commissioned by the ABI and carried out by YouGov reveal that:

One in ten adults - 5million people - freely admit to having made a fraudulent claim on a general insurance policy, such as home or motor insurance.

Opportunistic fraud carried out by individual customers alone costs over £800 million a year.

The home is seen as the richest source for insurance cheats: around half the cost dishonest claims occur under home contents and buildings insurance.

Nick Starling, the ABI’s Director of General Insurance and Health, said: “Honest customers should not have pay for the cheats. Insurers are committed to reducing the fraud problem. We are devoting greater resources to weeding out the cheats, and working together to detect and combat fraud. The Insurance Fraud Bureau is already having a significant impact on tackling organised insurance fraud.

“These figures highlight that greater deterrents, such as criminal prosecutions, are needed to discourage fraud. This is why we are calling for police forces to be given more resources so that fraud can be treated with the seriousness it deserves”.

According to the ABI, some of the most common types of opportunistic fraudulent claims insurers frequently uncover include:

Deliberate spills or cigarette burns on carpets or sofas that lead to claims for a new carpet throughout the house or new three-piece suite.

False or exaggerated claims for injury against local authorities, following trips over paving stones.

Exaggerating the value of lost or stolen items - such as cameras.

Some of the more unusual insurance frauds uncovered by the ABI and The Insurance Fraud Bureau include:

A man who claimed to be unable to walk following an accident was photographed in his local paper collecting an award for leading goal scorer in his local football team.

A bill submitted by a travel insurance policyholder for ‘rehabilitation services’ following an accident suffered while on holiday in West Africa which turned out to be for services rendered by a local brothel!

A woman reported her husband for exaggerating the injuries he received in a car accident hours after he walked out on her after having collected a £385,000 compensation settlement. For three years he had pretended to be crippled.

The ABI is the trade association for Britain’s insurance industry. Its nearly 400 member companies provide over 91% of the insurance business in the UK. It represents insurance companies to the Government as well as to the regulatory and other agencies, and is an influential voice on public policy and financial services issues. ABI member companies hold up to a sixth of all investments traded on the London Stock Exchange, on behalf of millions of pensioners and savers.

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