£1bn of bogus claims uncovered

Coins and notesThe value of uncovered bogus insurance claims has topped £1 billion for the first time as the industry hailed its efforts to clamp down on fraudsters.

Some 2,390 frauds worth £21 million were uncovered a week in 2012 on average, adding up to £1.1 billion worth of claims that were exaggerated or completely made up, the Association of British Insurers (ABI) said.

The ABI put the rise down to the impact of new fraud enforcement bodies getting tough on organised gangs, as well as good communication between insurers which has helped to track down people making multiple bogus claims to different firms.

Previous work by the industry body has estimated that fraudulent claims add £50 a year typically to everyone's annual insurance bill.

The value of insurance frauds which have been exposed has nearly doubled since records began in 2007.

Nick Starling, the ABI's director of general insurance, said it has "never been harder" to get away with insurance fraud.

He said: "There will be no let-up in the industry's zero-tolerance approach to insurance fraud. Honest customers rightly expect nothing less."

Standing at a total of 124,292 last year, the number of fraudulent claims in 2012 edged down slightly compared with 2011. However, the ABI said the fact that the value of these claims broke through the £1 billion barrier for the first time reflects the levels of high-value frauds which are being committed by organised criminal gangs.

These include "crash for cash" frauds, where car accidents are deliberately staged, sometimes with the criminal deliberately slamming on their brakes in front of an unsuspecting driver. Claims for "ghost accidents" which never took place are also sometimes submitted.

Dishonest motor claims were the most costly last year, with £614 million worth of dishonest claims detected, amounting to 42,700 claims in total. People making false claims for traffic accidents will often try to ramp up their claim by adding on extra expenses from car hire and personal injury.

Home insurance frauds were the most common last year, with 51,000 claims detected. Despite the large number of bogus home insurance claims, the total value of them, at £95.5 million, was less than one sixth of the cost of car insurance frauds.

Insurance cheats whose actions have been uncovered include:

:: A bus accident after which 34 people made personal injury claims - which was more than the capacity of the bus. One of the passengers was found to work for a claims management company and passengers were persuaded to falsify their injuries, the ABI said.

:: A woman who provided a photo of a watch she claimed had been stolen. The photo was later discovered to have been taken a few weeks after the alleged theft.

:: A man who downloaded pictures of a wound he found on the internet to back up a £500 claim.

:: A man who was caught on camera playing rugby while trying to claim nearly £1 million in damages from a workplace accident. He was later jailed for exaggerating his injury.
The ABI said that two bodies which have been set up in recent years are helping to push up detection rates.

The City of London Insurance Fraud Enforcement Department, which opened in January 2012 and has a specialist unit dedicated to tackling insurance fraud across England and Wales, has already investigated millions of pounds worth of scams.

Meanwhile, industry-funded body the Insurance Fraud Bureau, which was set up in 2006 and is tasked with disrupting organised motor insurance fraud, is currently helping police forces across the UK to break up scores of criminal gangs. The total value of scams it is investigating are estimated to be worth over £75 million.

Mr Starling said the work of these fraud detection bodies as well as that of insurers' own investigation teams underlines a determination to "come down hard on anyone who thinks making a fraudulent claim is 'easy money'".