Millions paid out by insurance customers to cover fraud

Insurance fraud has always been a big problem in the UK, and it seems that the honest people that do not defraud their insurance companies could actually be paying the price for those that do. According to recent figures insurance customers could be footing a bill for millions of extra pounds as a result of insurance fraud. Industry professionals say that honest policyholders are paying through the nose to make up for less honest insurance customers.

According to experts around four million pounds a day is being paid out in additional premiums by insurance policyholders as a result of insurance fraud. Data from the Association of British Insurers suggests that over one and a half billion pounds in additional premiums is paid out each year by honest policyholders simply because of the levels of insurance fraud taking place in the UK.

An official from the Association of British Insurers stated: "These figures highlight that greater deterrents, such as criminal prosecutions, are needed to discourage fraud. This is why we are calling for police forces to be given more resources so that fraud can be treated with the seriousness it deserves."

Fifty percent of fraudulent claims relating to insurance relate to home and contents cover. Around five million people have admitted to defrauding their insurance companies in some way, and these are the people for which honest policyholders are covering according to the Association of British Insurers. Some people even take out insurance for the specific purpose of making a fraudulent claim. Fraud can vary and includes those that make a valid insurance claim but inflate the amount that they are claiming for, and those that plan the fraud by taking out cover with the purpose of making a claim.