One insurance scam is spotted every minute leading to £1.3billion in bogus claims in a single year
- The epidemic has helped push up premiums for millions of honest policyholders
- A report uncovered 562,000 insurance frauds most were dishonest applications
- Motor insurance remains the biggest source of bogus claims but have fallen
One insurance scam is being detected every minute, leading to the rejection of £1.3billion in bogus claims last year.
A report out today gives the most detailed picture yet of the fraud epidemic which has helped push up premiums for millions of honest policyholders.
For the first time the Association of British Insurers has said how many people lie on application forms to get cheaper cover, on top of the number of bogus claims.
An insurance scam is being detected every minute as £1.3billion bogus claims were rejected last year and 562,000 were detected
In total, 562,000 insurance frauds were detected – 113,000 fraudulent claims and 449,000 dishonest applications. These include people concealing previous convictions and points on their driving licence to try to obtain cheaper cover.
The bogus claims alone which were caught and then blocked totalled £1.3billion last year, up 1 per cent on the year before.
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This meant although there was an 8 per cent drop in the number of claims, the value of each fraudulent claim rose.
Motor insurance remains the biggest source of bogus claims.
The value of fraudulent claims which were detected and rejected by insurers rose 4 per cent to £775million last year – with the number of claims also rising slightly to 67,000.
Amind bogus claims, car insurance is still the biggest source for them although they are down nine per cent from the year before
Motor premiums rose to a record £481 last year – up 9 per cent on 2016 – although they have fallen again in recent months.
The insurance industry has been heavily criticised for using any excuse to ratchet up premiums for customers, particularly when a policy comes up for renewal.
But it insists other factors have caused premiums to rise, including bogus claims, higher tax on insurance policies and the spiralling costs of repairing modern cars.
It has previously estimated that fraud adds £50 to the average household’s combined insurance bill.
The ABI also said claims management firms which bombard the public with text messages and phone calls encouraging them to claim for an accident they have not been involved in has contributed to the growth in bogus claims.
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