Record numbers of recession-hit householders are making fraudulent insurance claims, the Association of British Insurers (ABI) said today.
Figures for last year show that slightly more than 100,000 fraudulent claims were detected – a rise of 17% on 2007. The value of the claims was 30% higher than the previous year at £730m.
"Fraud thrives in a recession," said Nick Starling, the ABI's director of general insurance. "But cheating on your insurance really does not pay. The only thing you are likely to gain is a criminal record."
Dishonest home insurance claims were the most common types of fraud, the figures show, with 55,000 detected in 2008. By value, motor insurance claims were higher, totalling £360m.
In a separate survey carried out by YouGov for the ABI, one in five people said they would not rule out making a fraudulent claim in the future. This increased acceptance of insurance fraud as a way to make money was highlighted by separate research from Royal & Sun Alliance in January.
According to its survey, 1.4 million people consider insurance fraud more acceptable now than they did a year ago. That amounts to a total of almost 5 million people who do not think making a false claim is wrong.
Typical examples of insurance fraud include failing to disclose motoring convictions or previous claims when applying for cover, and exaggerating claims by adding extra items to a genuine claim. More drastic examples include people hiding their valuables and staging a burglary in an attempt to claim thousands on their insurance policies, or dropping their old television down the stairs so they can claim for a new flat-screen model.
The ABI estimated that fraud adds an extra £40 a year to the average insurance premium. "The harder we make it for the cheats, the more competitive premiums will be for honest customers," Starling said.
Insurance cheats caught out last year
• A policyholder claimed his car had been stolen following a mugging. Investigations revealed he had actually sold it to a friend.
• A woman claimed for a lost engagement ring, but was told her policy did not cover her outside the home. She then extended the cover and the next day claimed for the loss of the same ring.
• A man claimed "recovery expenses" following an illness while holidaying in West Africa. These were declined as they were for "services" at a local brothel.
Source: Association of British Insurers
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