Insurance companies taking action on fraud

Insurance firms are stepping up efforts to detect and punish people committing insurance fraud.

Figures from the Association of British Insurers (ABI) indicate that £1 million worth of fraudulent claims are made every day.

And insurers are covering claims worth £480 million each year. This has gone up threefold since 2003.

The organisation claims that around one in 11 claims made are fraudulent, of which 85 per cent involve an exaggeration of the value of the loss.

Household insurance is the area of insurance where fraud most commonly takes place, with a typical scam being the purposeful damaging of a carpet, with the policyholder then claiming the damage occurred accidentally.

Nick Starling, director of general insurance and health at the ABI, said: "Fraudulent insurance claims cost £1.6 billion and add £40 a year to the premiums paid by honest customers.

"But the industry is fighting back. Insurance cheats are more likely to be caught than ever before. And cheats will pay a high price as future insurance and credit will be more expensive and harder to obtain."