Insurance fraud register launched as bogus claims reach £1b a year

There are almost 400 fraudulent insurance claims a day, which would have cost the insurance industry and, in the end, customers, £1 billion a year, according to the findings of a report published by the Association of British Insurers (ABI).

The ABI says that fraudulent claims add an average of £50 to each insurance premium. It hopes that combating fraud will increase the industries' profits and allow premiums to come down for policyholders across the board.

The research says that bogus insurance claims increased by five per cent in 2011 and that there were 139,000 fake or exaggerated claims last year. That works out at 2,670 a week costing £19 million and us seven per cent up on the year before.

Otto Thoresen, ABI’s Director General, said: “The industry makes no apologies for its zero tolerance approach to insurance fraud. Honest customers are sick of footing the bill for insurance cheats, through higher insurance premiums.

By detecting the fraudulent claims, the ABI says it saved nearly £1 billion in payouts.

The report has been published as the ABI and insurers spearhead the launch of the Insurance Fraud Register. The register will have details of any insurance customer who has been caught trying to register a false or fraudulent claim.

Richard Davies of the ABI's Financial Crime Committee said: "The register will make it easier for insurers to prevent fraud by making details of known fraudsters available to insurers through a secure protocol.

"Those that defraud insurers and their honest customers face real and tangible consequences for their actions."

Some of the worst claims have been given as examples by the ABI. They include a man who hurt his thumb at a gym and downloaded a picture from the internet showing a more serious injury.

In another case a group of men hired a coach for a trip to the greyhound racing and following a pre-planned crash, all 30 members of the party put in claims for whiplash.

Home insurance saw the highest number of bogus claims with 71,000 fraudulent claims worth £106 million detected.

Car insurance fraud was potentially the most expensive type of fraud to the industry. 45,000 false claims were detected with a value of £541 million. The main factor was the rise of bogus whiplash claims.

This has been the main reason why motor insurers have suffered an underwriting loss every year since 1994, pushing up the cost of other types of insurance as insurers try and recoup losses.

Otto Thoresen went on to say: "The development of the Insurance Fraud Register marks a milestone in the fight against fraud. It reinforces the strong message that insurance cheats can expect difficulties in obtaining future insurance, credit and other financial products, as well as getting a criminal record."