Crackdown on fraudsters bears fruit

THE NET is tightening on insurance cheats, with companies exposing £3.5m a week in dishonest claims, according to a report out today. Insurers who cover two-thirds of the general insurance market uncovered fraudulent claims valued at £200m in 2004, the Association of British insurers said.

Malcolm Tarling, spokesperson for the ABI, told This is Money, 'This report shows the tip of the iceberg: it's hard to see what's underneath.

'It looks as though there's not been massive growth in opportunistic, 'casual' fraud by otherwise law-abiding customers - we've just been detecting more of it.

'But there is a real challenge in the growth of organised, more sophisticated fraud - and this is where insurers are now starting to develop new strategies.'

Frauds uncovered range from deliberately smashed TVs, invented burglaries and faked personal injuries, to highly organised scams.

This 95% rise on 2002 reflects increased resources, new fraud detection techniques and sharing of information between insurers, the Association said.

Insurance cheats exposed include:

A claim for a damaged carpet caused by 'accidental' spillage of paint was rejected when forensic tests showed it had been deliberately applied.

Following a claim for a burglary, the 'stolen' items were discovered being stored in the claimant's loft.

A man claiming to be unable to walk due to a back injury was found out when a picture appeared in his local paper of him collecting an award for top goal scorer for his local football team.

A woman reported her 'crippled' husband for exaggerating his injuries in a car accident after he walked out on her.

Chris Hannant, the ABI's Head of Financial Crime Prevention, said: 'Contrary to what some people think, insurers are no soft targets for fraudsters, and that is good news for honest policyholders.

'Protecting honest policyholders from the dishonest minority is a priority for the insurance industry. As well as weeding out the opportunistic cheats, the industry is also tackling the more organised frauds.

'Insurance cheats not only face the increasing risk of getting a criminal record, but will find future insurance and credit much more expensive and harder to obtain.'

Common frauds being detected include staged motor accidents involving criminal gangs who deliberately stage collisions with innocent motorists, and then claim for damage to the vehicle and whiplash neck injuries, backed up by witnesses, who turn out to be part of the scam.

Other examples include personal injury claims against local authorities alleged to have been caused by tripping over paving stones, which were actually sustained in unrelated incidents.

To stay ahead of fraudsters the industry has introduced a number of initiatives including the ABI 'Cheat Line' which offers a free confidential service to enable people to report suspected or known insurance fraud, and the development of a database, to help insurers quickly spot potential fraud from information held across multiple insurers.

The Cheat Line telephone number is 0800 328 2550.