Insurance fraud costing millions

According to a recent report insurance fraud in the UK is costing the industry tens of millions of pounds a year, with fake insurance claims becoming more and more prevalent, particularly in the current financial climate. The cost of investigating, repairing, and even paying out on fraudulent claims has resulted in a surge in costs for the insurance sector, and unfortunately these costs are then being passed on to the honest consumer.

It is thought that insurance fraud is costing the industry around £800 million a year, and officials from the Association of British Insurers have said that the most common type of fraud is in relation to home insurance. Figures indicate that in the UK around 170 homeowners file a false insurance claim every day, showing just how the value of fraudulent claims has soared to such a high level.

Whilst the insurance industry has become far more stringent with regards to running checks on claims that are made, particularly if there is something that does not seem to gel, many of these false claims still slip through the net, often because there is no way of proving that the claimant is not telling the truth. This level of fraud is costing not only the insurance industry a fortune, but also honest policyholders who have to pay more for their cover in order to cover the losses that are resulting from fraudulent claims.

An official from the Association of British Insurers said: ‘Insurance cheats do not prosper – they can expect to get caught, face problems getting future insurance and risk getting a criminal record. The majority of customers are honest and rightly object to subsidising the cheats. Insurance fraud adds an extra £44 to the average UK household’s annual insurance bill. This is why 2011 will see insurers intensify their war against the cheats, to protect their honest customers.’ 

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