There has been a record increase in insurance fraud. This conclusion is based on statistics compiled by the Association of British Insurers (ABI) covering the year ending 2009. The industry identified a total of 122,000 bogus claims, 4% of all claims, costing an estimated £840 million, which amounted to an increase of 14% on 2008.
In terms of value, motor insurance came out on top accounting for £410 million whereas home insurance constituted the more frequent fraud with 62,000 such claims identified. It is unclear whether the rise was due to improved methods of detection or triggered by the economic downturn.
Of the 8,500 false liability claims a high proportion of these were for personal injury. For instance, one man attempted to claim for a broken hand, he said the result of tripping over a pothole, but it was subsequently discovered that the injury arose during an incident of domestic violence.
In practice, this means that the ordinary honest customer has to pay higher premiums on average £44 a year to cover the cost of the cheats but Nick Sterling representing ABI stressed that:
“Whether claiming against a third party for bogus personal injury or on their own insurance, fraudsters are more likely than ever to get caught, leading to more expensive and harder to obtain insurance and credit, and the possibility of a criminal record.”
These figures do not include undetected fraudulent claims, with the total cost of fraud to the industry now thought to be in the region of £2 billion per annum.
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