The UK insurance industry is seeking to tackle the growing rise in insurance fraud taking place in the country, the industry has stated.
According to recent figures from the Association of British Insurers (ABI), insurance fraud currently stands in the region of £1.6 billion per year, putting a huge burden on insurers and making it difficult for them to keep premiums low for customers. This problem is highlighted by figures from the North West Fraud Forum, which found that one in ten adults admit to having made a fraudulent claim on a general insurance policy, such as home or motor insurance. It also revealed that around half of the cost from dishonest claims occurs under home contents and buildings insurance.
Commenting on the growing problem of insurance fraud, the ABI's Malcolm Tarling explained: "A lot of the claims are for the odd £50 here or £100 there but if you add them up, they do represent a huge loss." He explained that opportunistic fraud, such as adding to the value of something stolen, or increasing the number of items lost or destroyed, far outweighs any premeditated insurance fraud.
He added that the burden of dealing with insurance fraud is putting a strain on insurers, which are then forced to pass on their costs to honest customers. Mr Tarling suggests that the cost of insurance fraud adds as much as five per cent onto all premiums.
However, the insurance industry is working hard to tackle the problem of fraud and is aiming to cut the amount of money lost through fraudulent claims. Mr Tarling explained: "There is a lot that insurers are doing to step up their efforts."
One important development has been the use of technology in tackling insurance fraud, the ABI's spokesman explained. The use of information sharing over the internet and through databases has proved helpful in weeding out fraudulent activity and this kind of approach looks likely to become more prevalent as the industry attempts to crack down on fraudsters.
Insurers now "regularly share information so they can check through industry-wide databases", he commented, adding that certain insurers are now getting better at detecting fraudulent activity. It is these companies that need to be sharing information and using the technology available to them to help take the industry forward and reduce the threat of insurance fraud.
Mr Tarling also pointed to the industry's effort to deal with the more organised end of the scale, with the establishment of the Insurance Fraud Bureau, which demonstrates how seriously the industry now takes the issue of fraudulent claims and criminal activity within the insurance sector.