UK insurers thwart 2,400 fraudulent insurance claims valued at £25m every week

This amounts to 2,400 claims a week and £1.3 billion across the entire year, a year-on-year reduction of 5 per cent compared to 2015, with the value down 3 per cent over the same period.

Overall 125,000 dishonest claims were identified throughout the year.

The ABI said a focus on stamping out organised fraud, including ‘crash for cash’ staged motor accidents had contributed to the slight fall in the number and cost of fraudulent insurance claims detected in 2016.

Often organised insurance scams are carried out by highly sophisticated criminal gangs that can put innocent lives at risk, and have links to more serious organised crime, such as money laundering and human trafficking.

However, there was a small rise in opportunistic spur-of-the-moment motor insurance frauds.

ABI said such claims are often encouraged by disreputable claims management firms, such as for whiplash-style claims.

Property insurance frauds, meanwhile, showed a slight fall, with the number dropping 4 per cent on 2015 to 26,000, while their value fell 2 per cent to £106 million.

ABI figures also showed that in 2016 the level of organised fraud fell by around 30 per cent on 2015, with 15,000 frauds valued at £174 million detected.

This fall reflects the work of the Insurance Fraud Bureau (IFB) and the Insurance Fraud Enforcement Department (IFED), the specialist police investigation unit, in exposing crash for cash staged motor accidents, and other organised frauds, such as criminals offering fake motor insurance. It is also believed that fraudsters are moving into new areas such as bogus liability claims. There has been an epidemic in false food poisoning claims made against some overseas hotels and tour operators, often encouraged by disreputable claims management firms.

Examples of organised insurance scams uncovered included four members of a criminal crash for cash gang were sentenced to over 37 years for their part in a staged accident that resulted in the death of a passenger in the vehicle they targeted.

In a separate case, following a five year investigation, six people were convicted of a series of sophisticated frauds, including setting up a claims handling firm to deal with bogus personal injury claims, and making a false business interruption claim worth nearly £600,000. They also defrauded funeral plan companies.

And a fraudster who sold non-existent car insurance policies in restaurants and internet cafes was ordered to pay back £253,000 he had made from the crime.

James Dalton, ABI’s Director of General Insurance Policy, said: “The vast majority of insurance claims are genuine, with millions being paid to customers every day. The industry does everything it can to keep premiums down and tackling fraud, which drives up prices for honest customers, is at the heart of that. So it’s great to see we have achieved real success in tackling organised fraud in the last year.

“Opportunistic fraud has shown a small rise as people continue to be pestered by disreputable claims management firms that are helping fuel the compensation culture. This makes it imperative that the Government tightens regulation of claims management companies, and presses ahead with its further reforms on whiplash, so we are pleased to see this much-needed reform in the Queen’s Speech.”