After industry experts revealed that car insurance companies incurred costs in excess of £18 million a week in 2010 due to fraudulent claims, providers of discount car insurance in the UK have decided to combat rising levels of fraud by setting a national register up in order to record offenders.
Motor car insurance fraud is estimated to cost more than £2 billion annually, resulting in every policyholder in Britain paying an extra £44 a year on average in premium payments, says the Association of British Insurers, equal to around 2,500 on a weekly basis – an increase of 9 per cent on the year before. The ABI also said that, despite the number of accidents in the UK decreasing over the past five years, the amount and valueof fraudulent claims in the UK has increased more than twofold.
The number of bogus motor insurance claims was estimated at approximately 40,000, which is less than the approximately 66,000 fraudulent home insurance claims that were reported during the same time period, yet were still found to have the highest cost to insurers at £466 million. Insurance companies found that the number of policyholders making frivolous car accident injury claims increased, which was attributed to Insurers reported a rise in the number of people making frivolous a ‘compensation culture’ spearheaded by conditional fee agreement legal experts.
Escalating car insurance fraud costs are the primary motivator behind premium price increases, industry officials state. The recently published insurance premium index from the AA found that, despite a tapering off in the rate of increase, new records were set for car insurance premiums in the 2nd quarter of 2011.