Tuesday 23rd October 2007
Insurance fraud costs the industry a total of £1.6 billion each year, according to figures from the Association of British Insurers (ABI).
Honest customers bear the brunt of this bill, with the average premium increasing by about £40 to cover the cost, the industry body states.
But companies are working to prevent fraudulent claims from being paid out and are uncovering £1 million of such claims every day.
Many fraudulent claims are for small amounts and may be down to genuine claims being exaggerated - but this is still fraud, the ABI asserts.
Spokesperson Malcolm Tarling explains: "A lot of the claims are for the odd £50 here or £100 there, but if you add them up, they do represent a huge loss."
"A lot of instances of fraud start off as genuine claims in that something has actually happened, but what is claimed is inflated," he adds.
Mr Tarling warns consumers of the Insurance Fraud Bureau, an industry body established last July which looks for the "telltale signs" of a fraudulent claim.
While the bureau targets high-level fraud, he reminds consumers that their insurers will also be looking out for any suspicious details.
This could include contents insurance claims where the policyholder cannot prove they owned any of the items listed.
According to the Insurance Fraud Bureau, previous research from the ABI found that a quarter of all fraudulent claimants believe that "most people do it, so it is acceptable".
But with fraudulent claims adding an average of five per cent on to policy premiums, both organisations warn of the cost to honest consumers.
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