Fraudulent insurance claims on the rise due to recession

| April 16, 2009 | 0 Comments

According to the Association of British Insurers (ABI), the recession has sparked an increase in the number of fraudulent insurance claims.

The ABI found that around 107,000 claims totalling £730 million were false last year - this value was up 30% on 2007, with the figure rising since 2004.

Figures show that the most common fraudulent claims were home insurance with more than 50,000 false claims detected last year.

However, the highest by value were fraudulent car insurance claims, valued at £360 million.

The rise in fraudulent claims has been attributed to the recession, with an increasing amount of people seeking ways of obtaining cash.

However, the ABI warns that “insurers are intensifying their crackdown on insurance cheats and that fraud adds an extra £40 a year to the average premium.”

In related news, research from Sainsbury’s Finance found that nearly 950,000 Brits have either given up or cut down their home contents insurance, whilst an additional 700,000 have reduced or stopped payments for their buildings protection.

This is primarily as a result of the recession as people cancel or reduce their insurance policies in a bid to save money.

Life insurance policies have also been a target of the new frugality, with over half a million dropping life insurance policies because they needed the money to pay more important bills.

Nearly 600,000 have reduced their car insurance due to an increase in financial pressure.

However, Neil Laird, Sainsbury’s home insurance manager, warned that reducing or axing insurance cover could have ’serious financial consequences’ were anything to go wrong.

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