Insurance fraud rises by almost a fifth and is costing you 50 a year

New figures have revealed that the value of bogus insurance claims in the UK rocketed in 2013. According to the Association of British Insurers, the value of fraudulent claims discovered by insurers rose to a record amount of £1.3 billion last year, up 18 per cent on the previous year.

Now, however, the industry is fighting back with a range of measures designed to identify people making fraudulent claims. Keep reading to find out more.

324 fake insurance claims made every day in the UK

The data from the Association of British Insurers shows that insurers detected 118,500 fraudulent or exaggerated insurance claims in 2013, equivalent to 324 every day.

The average value of a bogus claim was £10,813 and while the number of detected fraud cases fell slightly, the value rose by almost a fifth to £1.3 billion.

The ABI reports that since 2007 the value of dishonest general insurance claims detected has more than doubled, with the number detected up 30 per cent over the same period.

The most common bogus claims were on motor insurance policies. Here, there were 59,500 fake claims with a value of £811 million. This represents a 34 per cent increase on the number of bogus claims made in 2012.

Fraudulent pet insurance claims rose by a massive 65 per cent to a record £1.2 million last year with much of the value rise being attributed to hikes in veterinary treatment costs.

However, the number and value of property insurance frauds fell on 2012 to 35,000 frauds worth £137 million.

Insurance industry and police fighting back against the fraudsters

The ABI estimates that insurance fraud adds around £50 per year to the UK’s average general insurance bill, including both motor and home insurance. Now, a number of initiatives are targeting bogus claimants in order to cut the incidence of fraud.

One success story has been the Insurance Fraud Enforcement Department, a specialist police unit established in 2011. Their investigations have so far led to 470 arrests and 85 prosecutions of insurance fraudsters.

In addition, the public are also helping to target bogus claims. In 2013, calls from the general public reporting suspected insurance frauds into the Insurance Fraud Bureau’s Cheatline rose by almost a third (32 per cent) compared to 2012’s figure.

Aidan Kerr, the ABI’s Assistant Director, Head of Fraud, said: "The vast majority of customers are honest and rightly expect tough action against the fraudsters. Insurance fraud is not a victimless crime, which is why the industry invests £200 million a year in fraud detection, including funding the Insurance Fraud Enforcement Department, and developing the Insurance Fraud Register, a central database of known insurance cheats.

“The more that is done to crackdown on the dishonest, the quicker and more effectively insurers can deal with the claims from the honest majority.

"The message is clear: never has it been harder to get away with committing insurance fraud; never have the penalties - ranging from a custodial sentence and a criminal record to difficulties in obtaining financial products in the future - been so severe.”

3 examples of insurance fraudsters brought to justice 

1. The 'Crash for Cash' plot

Sixty people, including seven members of the same family, were convicted of staging a ‘crash for cash’ scam which involved over £514,000 being claimed from 25 vehicle accidents.

2. Fake street robberies 

A woman was jailed for 22 months for inventing a number of street robberies for expensive items including designer clothes and laptops.

3. Vet treated non-existent pet

A vet was jailed for two years for faking a number of pet insurance claims totalling almost £200,000 for treating pets that did not exist.

By Nick Parkhouse

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