£18m of fraud every week
ABI figures also showed insurers uncovered 133,000 fraudulent insurance claims in 2010, 2,500 every week up 9% on 2009. The value of these claims was £919m, also up 9% on the previous year.
Over the past five years both the number and overall value of insurance frauds detected have risen by over 100%.
The most common frauds involved home insurance with 66,000 false or exaggerated claims detected, followed by dishonest motor insurance frauds with 40,000 frauds uncovered. Motor frauds were the most costly, totalling £466m.
The value of savings from detected frauds represented 5% of all claims, compared to 4% on 2009.
Nick Starling, director of general insurance and health, at ABI: “Insurers are working harder than ever to protect honest customers against fraud. The savings made by weeding out fraudulent claims would otherwise end up being paid for by honest policyholders through higher premiums.
“Fraudsters continually look for new ways to con insurers, so we are upping our game. Early next year we will be setting up a national Insurance Fraud Register, which will contain details of all known insurance cheats. And at the same time the first ever national police insurance fraud investigation unit will begin its operations, making it harder than ever to commit insurance fraud.”
Glen Marr, director at the Insurance Fraud Bureau, added: “Fraudsters will increasingly find the insurance industry a hostile environment. The IFB is committed to supporting insurer efforts to systematically root out and tackle fraudsters.
“At the IFB we have access to a significant volume of industry data, use sophisticated and powerful analytical software, work in partnership with insurers, law enforcement and regulators and have no shortage of reports being received from consumers of their knowledge or suspicions of those concerned with defrauding the industry, through our Cheatline facility.”
Steve Phillips, head of fraud at Legal & General general insurance, said: “Insurance providers like ourselves are constantly investing in improving their fraud detection and prevention. It’s maybe not surprising to see an increase in the level of fraudulent activity detected last year.
“Unfortunately there is still more that can be done. As the FraudStoppers research we conducted earlier this year highlighted, nearly a third of Brits, 29% think it is acceptable to exaggerate a home insurance claim and we do continue to see some customers thinking it is acceptable to add items even ones that they have never owned to an insurance claim.”
“Thankfully the message that this is fraud and wrong is getting through. For example, we recently had a customer who claimed that a theft had taken place at their home and rightly reported it to the police. However, their ex-partner subsequently, came forward and advised us that £3000 worth of the items that the customer had claimed for under their home insurance cover were items, that as part of their separation agreement, the ex-partner actually still had in their possession.
“As a result the police prepared a court case and the policyholder was convicted of fraud for false representation.
“So it’s clear to us that we need to continue to improve understanding of what constitutes insurance fraud. People need to appreciate that insurance providers zero-tolerance policy applies to all fraudulent activity and that means what some people may consider, “just a small exaggeration”, could still lead to prosecution. It’s not just the larger scale fraudulent activity that goes to court.
“We make every effort to pay all valid claims. Plus by working across the industry, with intermediaries and our customers, to continue to tackle insurance fraud, we hope that we will be able to reduce the extra £44 a year on average that insurance fraud adds to every UK customer’s policy.”