New insurance industry figures show the increasingly damaging impact of fraud on the cost of cover. But providers are pledging to crack down on bogus claims.
Britain’s insurers are losing £2.3 million every day to fraud, new figures from the Association of British Insurers show.
Bogus claims on car insurance policies account for almost half the total, at £1.12 million a day – more than £400 million a year.
But the most common type of fraud relates to home contents policies, with scores of daily claims for accidental damage that has, in fact, been caused deliberately.
The ABI said fraud added an average of £44 a year on to each household’s overall insurance bill.
Spokesman Nick Starling said: “Insurance cheats do not prosper – they can expect to get caught, face problems getting future insurance and risk getting a criminal record.
“The majority of customers are honest and rightly object to subsidising the cheats. This is why 2011 will see insurers intensify their war against the cheats, to protect their honest customers.”
Among the examples of fraud recorded by the ABI was a claim for theft of DVDs which were yet to be released in the UK.
Another man claimed for compensation after tripping over a loose paving slab, only for investigators to find his injuries had been sustained after being hit with a baseball bat in a fight.
A further individual told his insurer his car had been damaged while parked near his home. In fact the vehicle had been involved in a collision while racing at the Nürburgring track in Germany.
The fight against fraud
At Confused.com, we recognise the harmful effect that rising fraud levels are having on ordinary policyholders, in particular motorists.
In November, our head of car insurance, Will Thomas, appeared in front of the House of Commons Transport Select Committee as part of its investigation into soaring car premiums.
Fraud – for example, inflated personal injury claims – is thought to account for the lion’s share of recent rapid policy cost increases.
Confused.com presented MPs on the committee with a list of suggested changes to the insurance system which could help curb price rises.
These included the promotion of better data-sharing among insurers and the DVLA to help identify fraud more quickly, and limits on the legal fees accrued in personal injury cases.
Also last month, we spoke exclusively to Portsmouth University academic Dr Sharon Leal, who is currently conducting a two-year study into how insurers can identify fake claims and thereby cut the amount of fraud.
She suggests that current methods – for example the belief that anyone who fidgets or averts their gaze under questioning is lying – are misguided, and result in huge wastes of money when truthful claimants are pursued.
