UK insurance fraud hits record £840bn

'Bogus Britain' made 122,000 insurance claims last year. Not that we're entirely surprised...

Last Updated: 31 Aug 2010
Having your property stolen or damaged is a pretty unpleasant experience, so it’s easy to see why people would occasionally seek to redress the karmic balance by adding an extra stereo or a shiny new iPod to their insurance claim. Apparently, though, Brits are taking cosmic justice into their own hands a little too often: new figures have shown last year, the insurance industry turned down 122,000 insurance claims – 14% more than the year before.

Have we turned into a nation of fraudsters, or has the insurance industry just become better at detecting bogus claims? Either way, we can already hear cries of ‘broken Britain’ echoing across the land...

The figures, from the Association of British Insurers, showed that the dodgy claims totalled a record £840m last year. That means there were 6,000 dishonest claims, worth a very impressive £16m, made each week. It may be perceived as a ‘victimless’ crime, but those most affected are, naturally, The People, who are apparently paying an average of £44 more per household for their insurance premiums than they need to because of fraud. Then again, if so many of us are making spurious claims, perhaps it serves us right.

One of the worst culprits was car insurance, which accounted for nearly half the dodgy claims made last year – in fact, car insurers uncovered £410m worth of fraudulent claims. One enterprising chap had even been uncovered staging 90 accidents, defrauding the industry of an estimated £1.8m before he was caught. That said, it’s hitting car insurers hard: figures by the AA estimate that for every £1 paid in insurance premiums, £1.22 is paid out.

Home insurance accounted for the lion’s share of the claims, with 62,000 people adding a little something extra, while liability claims (no-win no-fee lawyers: hang your heads in shame) made up 8,500 of the bogus claims. And at an average of £25,000 each, liability claims are a little bit more serious than adding a few sneaky inches to the size of your TV after you’ve been burgled.

The interesting thing is that at 4%, the number of fraudulent claims by value is double the figure of five years ago. Could the recession mean we’re all turning a blind eye to the ethics of the situation? It’s difficult to say – the ABI, though, says the insurance industry has got better at detecting false claims. There’s even a special Insurance Fraud Bureau, known as the IFB – one (slightly pompous) Telegraph blogger points out it might be better known as ‘FIB’. Or, because of its new, advanced snooping techniques, we suggest it goes the whole hog and renames itself the ‘FBI’.

It’s unfortunate that people are making more false claims, but it’s not particularly surprising: anyone who has ever had to claim on their insurance knows most providers aren’t exactly the last word in service or magnanimity. Time for a rethink, perhaps?

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