The cost of fraudulent insurance claims is estimated to have fallen from £585 million in 1995 to £560 million this year, a drop of 4.5%, according to the latest survey by the Association of British Insurers. The survey highlights that industry initiatives to reduce the level of insurance fraud are having a real impact.

The results of the survey were revealed today (12 December) at the Association's Annual Fraud Seminar in London. The survey covered insurers who held in excess of £15.9 billion non-life premium income and handled over 10 million claims in 1996.

Key findings include:

• Fraudulent claims totalled £560 million in 1996, down £25 million from 1995. Non- life fraud cost 3.5% of premiums.

• Inflated claims remain the most common type of fraud (39% of the total cost of fraud) followed by misrepresentation (30%).

• The number of motor insurance claims which were fraudulent fell from 3.9% to 3%. This reduction in part reflects the impact of motor claims data being included on the Claims and Underwriting Exchange (CUE) computer database.

• Household insurance fraud also fell, from 4.8% to 4.2% of claims. This was attributable in part to CUE household which now holds details of over 17 million household claims.

• Fraudulent claims under creditor and personal accident policies increased slightly. For creditor insurance, fraud accounted for 8.5% (8% in 1995) of claims and, in respect of personal accident, 5.5% (5.2%). Industry initiatives are planned to tackle this problem area and it is anticipated there will be significant reductions in future years.

To coincide with the seminar, ABI is publishing the Crime & Fraud Prevention Bureau Annual Report for 1996. In addition to the results of the survey, this includes details of the industry's initiatives to combat fraud, including the impact of anti-fraud computer registers. The seminar will be attended by over 130 representatives from insurers, police, government departments and overseas organisations involved in fighting fraud. Speakers from the police, insurers and crime fighting agencies will outline the latest developments in identifying and tackling the problem of fraud.

With anti-fraud initiatives continuing to reduce the cost of fraudulent claims, insurance cheats who have been caught out during the year have included:

• On investigating a man's £14,000 claim for medical treatment and convalescence in Africa following a bout of Malaria, it was discovered that the hospital was in fact a local brothel.

• Two men claimed more than £70,000 from insurers after staging motor accidents with each other and, in separate claims, also fraudulently obtained sickness insurance payments.

• A taxi driver who claimed £75,000 as a result of whiplash injuries which he alleged had left him unable to work was seen working at Manchester Airport and playing golf.

• A company executive faked a £3,300 burglary claim by hiding hi-fi and video equipment in his attic. He claimed that the thieves got into the house through an open window, but had in fact concocted the story because he and his wife were in debt.

• While on holiday in Spain a man claimed for the medical costs of an operation to remove his appendix. Investigations revealed that he had in fact claimed 17 times previously for the removal of the same appendix.

Mark Boléat, ABI's Director General, said:

"It is very encouraging that the estimated cost of fraudulent insurance claims has fallen for the fourth year running. But the £560 million total does, however, remain too high and we are determined to reduce it.

"Fraud will not go away and it requires constant vigilance to keep it under manageable control. We need to remember that many of those who target the insurance industry do the same to the Benefits Agency and other organisations. We are also seeing evidence of fraud cases involving more than one country. This must be out next priority and, through the Comit‚ Europ‚en des Assurances, the European insurance association, we are already taking steps to counter this threat."

Notes

1. Copies of the Crime & Fraud Prevention Bureau Annual Report 1996 areavailable from Crime & Fraud Prevention Bureau, ABI, 51 Gresham Street, London,EC2V 7HQ.

2. For further information:

   Malcolm Tarling +44 020 7216 7410 (Home +44 020 82979510)
   Suzanne Moore +44 020 7216 7411 (Mobile 0378 794717)
   Vic +44 020 7216 7440 (Home +44 020 8647 5188)

3. For radio broadcasts, an ISDN line is available.