Home insurance fraud on the rise

Recent figures released by the Association of British Insurers (ABI) have revealed that insurance companies uncovered 122,000 fraudulent insurance claims in 2009, up 14% on the figure for 2008. Stats suggest that 4% of all claims by value in 2009 were fraudulent, a figure that is nearly double that of five years ago.

As well as this, the ABI reported that the value of bogus claims has also risen by 14% on 2008 figures. The result of these claims is that insurance companies have seen motor and home insurance policies push the value of detected insurance fraud to a record £840m in 2009.

Although not the highest by value, the ABI have reported that the highest number of bogus claims was detected in home insurance, with 62,000 false or exaggerated claims picked up in 2009 alone.

Reacting to these worrying statistics, the ABI’s director of general insurance and health, Nick Starling, has warned potential fraudsters that they are “more likely than ever to get caught, leading to more expensive and harder to obtain insurance and credit, and the possibility of a criminal record.” This stark warning should help remind people thinking of placing a bogus claim of the foolishness of their decision and the likely outcome of it.

A potential implication of the rise in bogus claims is that honest consumers will see their premiums rise through no fault of their own. However, with consumers already hard pressed to afford a reported 11.5% increase in car insurance alone, insurers would risk seeing people take their chances without insurance should they choose to increase their premium rates.