Insurance fraud costs £1.9bn per year

| July 27, 2009 | 0 Comments
Insurance fraud costs £1.9bn per year

Undetected insurance fraud has increased 24% in the past two years, the Association of British Insurers (ABI) said this week.

Insurance fraud has soared to an estimated £1.9 billion per year, the ABI said, equivalent to £5.2 million per day.

Detected insurance fraud has also increased, with £730 million worth of claims rejected in 2008, a 30% increase compared to 2007.

As insurers have become better at detecting fraudulent claims, fraudsters have switched tactics and have started being “economical with the truth” to obtain cheaper quotes.

Popular tricks include not owning up to speeding convictions, listing the wrong address for a motor insurance policy, or listing the parent as the main driver on a young person’s vehicle.

The ABI said the insurance industry is making every effort to catch out bogus claimants.

“There is no hiding place for insurance cheats,” said Nick Starling, ABI spokesperson.

“Honest customers should not have to pay for the fraudsters.

“Closer scrutiny of proposal forms and claims, as well the exchange of information through industry-wide databases, is tightening the net on the cheats.”

A recent survey by the ABI found 16% of Brits would not rule out making an exaggerated insurance claim.

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