Its figures showed that fraudulent insurance claims rose to a total of £919m in 2010, with the number and value of insurance frauds being detected more than doubling in the last five years.
The ABI revealed that, to fight fraud further, it will launch a national Insurance Fraud Register in early 2012 containing details of all known insurance cheats, while the first national police insurance fraud investigating unit, funded by the industry, will also begin its operations.
The ABI estimates that insurance fraud costs £2bn a year, adding an average of £44 a year to the bill of every UK insurance policyholder.
The most common fraud involves home insurance, with 66,000 fraudulent or exaggerated claims detected, followed by motor insurance fraud at 40,000 bogus claims.
The ABI said that the value of savings from detected insurance fraud amounted to 5% of all claims, up from 4% in 2009.
Nick Starling, director of general insurance and health at the ABI, said: “Insurers are working harder than ever to protect honest customers against fraud. The savings made by weeding out fraudulent claims would otherwise end up being paid for by honest policyholders through higher premiums.”
Glen Marr, director of the Insurance Fraud Bureau, added: “Fraudsters will increasingly find the insurance industry a hostile environment. The IFB is committed to supporting insurer efforts to systematically root out and tackle fraudsters.”
Steve Phillips, head of fraud for Legal & General’s general insurance business, said: “As insurance providers, like ourselves, are constantly investing in improving their fraud detection and prevention, it is maybe not surprising to see an increase in the level of fraudulent activity detected last year.
“Unfortunately, there is still more that can be done.”
L&G’s recent FraudStoppers research revealed that 29% of Brits think it is acceptable to exaggerate a home insurance claim and Phillips said it continues to see customers who think it is acceptable to add items, including ones they have never owned, to insurance claims.
He said: “Thankfully, the message that this is fraud and wrong is getting through.
“It is clear to us that we need to continue to improve understanding of what constitutes insurance fraud. People need to appreciate that insurance providers zero-tolerance policy applies to all fraudulent activity and that means what some people may consider, ‘just a small exaggeration’, could still lead to prosecution. Its not just the larger scale fraudulent activity that goes to court.”
Insurance fraud uncovered by providers in 2010 included:
- A woman’s claim for facial injuries she said resulted from a falling toilet roll holder in a fast food outlet was rejected when it was shown that the holder would have had to have fallen upwards to cause the injury claimed
- A claim for back injuries apparently sustained from a fall while working in a nightclub was rejected when Facebook images showed the claimant performing gymnastics and training for a charity run
- A claim by a woman for the loss of a £2,000 watch after a night out was rejected when the photograph she provided of her allegedly wearing the watch turned out to be that of a friend
- A claim for injury said to be caused by falling over a wall was rejected when it was proved that there was no wall at the scene of the alleged incident
