Fake injuries, fictitious stolen goods and exaggerated claims for car repairs are all ways in which policyholders attempt to defraud their car insurance provider, according to Admiral Insurance.

The FTSE 100 company is the latest insurer to warn that it has seen a significant increase in fraudulent claims from individuals and criminal gangs in the first half of the year.

David Stevens, Admiral’s chief operating officer, said that the company had received “roughly a third” more suspicious claims during the period than in the first half of 2008. He added that Admiral, which specialises in car insurance, had discovered several instances of false or exaggerated claims such as fake whiplash following minor prangs, as well as policyholders lying about the number of people they were driving in their car at the time of an accident.

“There is some evidence that people are either creating fictitious claims or lying about the number of people in their cars,” he said. “The industry is feeling some rise in fraud, including organised gangs committing fraud.”

During the first half of the year, Admiral identified fraudulent claims worth 2-3% of the £404.6million it had paid out in premiums. It did not pay out for these claims. However, the company estimates that around 5% of written premiums are actually fraudulent, since false claims are often difficult to detect.

Aviva, Britain’s largest household insurer, has also been hit by a rise in insurance fraud. The company discovered 29,000 fraudulent claims worth £200 million in 2008 - a rise of 30% by volume and 20% by value on the previous year. This year has seen a 10% rise in fraudulent claims so far, Aviva said.

Andrew Buck, claims fraud manager for Aviva, said: “We have seen significant increases in both the motor and household arena. We cannot say how much of this is solely down to the economic climate. Clearly when times are tougher, crime increases.”

The Association of British Insurers estimates that £1.9billion fraudulent insurance claims go undetected each year, adding on average £44 a year to the cost of an individual policy. Whilst insurers are getting better at detecting fraudulent claims, the recession is spurring activity, the ABI said.

This entry was posted on Wednesday, August 26th, 2009 at 9:43 am and is filed under Car Insurance, Home Insurance, Insurance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.