Insurance Fraud Increases

The Association of British Insurers (ABI) has today published a report showing that more than 2,000 insurance frauds are being detected every week.

According to the ABI, in 2008, 107,000 fraudulent insurance claims were exposed — up 17 per cent on 2007. The value of these claims was £730 million — up 30 per cent on the previous year.

Fraudulent motor insurance claims were the biggest by value, with 35,300 dishonest or exaggerated motor insurance claims mounting to £360 million.

These included a man who claimed that his car was stolen after he was mugged but who was later found, by investigators, to have sold the vehicle to a friend.

Another man was jailed for nine months after receiving £9,000 in compensation for a broken ankle which he claimed had been sustained by tripping over a pothole but which was actually happened whilst he was playing football.

The ABI said another policyholder had claimed that his car, which was later found at the bottom of a cliff, had been stolen from a car park. He later admitted pushing it over the cliff himself, with the intention of using the insurance payout to clear his debts.

According to Nick Starling, the ABI’s director of general insurance and health, four per cent of all insurance claims, by value, in 2008 had been fraudulent. That was up from three per cent the previous year.

He said: “Fraud thrives in a recession, so insurers are intensifying their crackdown on insurance cheats. Fraud adds an extra £40 a year to the average premium, which is why the harder we make it for the cheats, the more competitive premiums will be for honest customers.

“Cheating on your insurance really does not pay — you will get caught, future insurance will be more expensive and, along with credit, harder to obtain. The only thing you are likely to gain is a criminal record.”

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