2010 fraud instances saw £919 million bilked from insurers, which exceeded 2009 figures by a factor of 9 per cent. According to the Association of British Insurers, over the past five years both the value and number of detected instances of insurance fraud has gone up by more than 100 per cent.
Car insurance companies end up shelling out an extra £2 billion in costs every year due to fraudulent claims. This means that for the honest policyholder in the UK, their car insurance rates go up by an average of £44 every year.
Insurers have been prompted by the scale of the issue, laying plans to set up an insurance fraud register by the beginning of 2012. This register will be used to publicise certain personal details of those found to be defrauding their insurance companies.
Home insurance fraud was found to be the most common form of exaggerated claim discovered by insurance companies last year, with 66,000 instances of either misrepresented or outright fabricated claims. Motor insurance claims, were quite costly with a total of £466 million.
General insurance and health director at the ABI, Nick Starling, remarked that fraudsters are constantly on the lookout for new and more effective ways to pull the wool over insurers’ faces. As a result insurers have had to step up their own game through the setup of several key strategic initiatives designed to make it harder for fraudsters to function.