Insurance fraud costs consumers £1 billion a year

26 July 2013

The value of fraudulent insurance has topped £1 billion for the first time, with the industry saying there will be "no let-up" in its fight against phony claims.

The number of fake claims reached 124,292 last year – 2,390 a week – costing insurance companies a total of £1.1 billion, the Association of British Insurers (ABI) said. It is thought that insurance fraud adds £50 to £90 a year to consumers' insurance premiums.

Nick Starling, ABI's director of general insurance, said: "There will be no let-up in the industry's zero-tolerance approach to insurance. Honest customers rightly customers rightly expect nothing less."

The ABI said the number of frauds detected between 2007 – 2012 rose by a third, with the total value doubling in this time.

In 2012, the majority of fake claims were on home insurance with 51,000 claims, valued at £95.5 million, according to the trade body. Fake claims on motor insurance policies were the most costly, with 42,700 claims made in 2012 valued at £614 million.

Starling warned of the penalties fraudsters face in submitting false claims. "Never has it been harder to get away with insurance fraud, never have the penalties – such as getting a criminal record and being in able to get future insurance and other financial products – been tougher."

Examples of insurance fraud the ABI uncovered included a man who was jailed for eight months after he was caught playing rugby while trying to claim nearly £1 million for a workplace injury. A woman was sentenced to prison, along with her daughter and husband, after falsely claiming she was left severely disabled as the result of a car crash.

The ABI said the City of London Insurance Fraud Enforcement Department, which tackles insurance fraud across England and Wales, has made hundreds of arrest and is securing a growing number of convictions.

Starling added: "The impact of the Insurance Fraud Enforcement Department, the development of the Insurance Fraud Register and the work of insurers own fraud investigation teams underline our determination to deter potential cheats and come down hard on anyone who thinks making a fraudulent claim is 'easy money'."

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