Insurance fraud tops £1bn: how to legally reduce the cost of your premium

Dodgy insurance claims were worth £1.1 billion last year, according to new data from the Association of British Insurers (ABI).

The number of bogus claims detected rose by 4% year-on-year, with the average fake claim now worth £13,000.

Around 220 fraudulent claims were made every day, with car insurance scams most common.

Read on to find out how dodgy claims are pushing up prices for everyone, and for our tips on legally cutting the cost of insurance.

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Dodgy car insurance claims top £500 million

UK insurers identified 84,400 fraudulent claims in 2023, a rise of 16% year-on-year. These figures include all types of general insurance, including car, home, and travel. 

Car insurance accounted for the majority of dodgy claims. The ABI reported 48,800 motor insurance scams last year, worth a combined £501 million.

The most common was exaggerated loss, when someone tries to increase the cost of a claim above its real value. 25,700 claims of this type were detected, totalling £407 million.

There was a 16% rise in fake home insurance claims, with 16,700 property cases worth a total of £143 million.  

Fraudulent insurance applications totaled 583,000, up 17%. This is where someone deliberately leaves out information or misrepresents it for financial gain.

Examples of insurance fraud

The ABI shared some examples of insurance fraud that were detected in 2023. These included:

• a ghost broker who sold over 900 fake motor insurance policies worth £200,000.
• a woman who exaggerated injuries she sustained in a road traffic collision and tried to make a claim worth £492,101.
• a serial fraudster who submitted false home insurance claims for broken TVs, laptops and phones, worth £11,750. 
• a man who changed his name multiple times by deed poll and used the identities of his family and friends to make travel insurance claims worth a total of £75,000.

Bogus claims are pushing up premiums

Fraud is one of the reasons that insurance premiums are continuing to rise.  

Car insurance premiums increased to an average of £622 between April and June this year, according to the ABI. That's up 21% year-on-year.

It’s a similar picture for home insurance. Premiums average £396 for a combined buildings and contents policy. This is a 19% rise compared to 2023.

Mark Allen of the ABI says: 'Fraud doesn’t just impact victims that fall foul of the scammers, it affects everyone that pays for an insurance policy.  

'Bogus claims are pushing up the cost of premiums for all. That’s why cracking down on fraud continues to be a top priority for our industry.'

• Find out more: what's happening to car insurance premiums?

Why is insurance fraud on the rise?

Rising insurance prices, high inflation, and the cost-of-living crisis have all been blamed on the rise in insurance fraud.

We reported earlier this year on research that showed a quarter of drivers had lied to reduce their car insurance premium. A fifth also admitted they are tempted to continue lying in the future if it meant cheaper costs.

Some of the most common lies were as follows:

• underestimating annual mileage
• lying about where a vehicle is kept
• falsely stating that a car is fitted with a security immobiliser
• putting the wrong profession down or claiming to do a lower-risk job
• lying about how their vehicle is used.

Insurance fraud is serious, and can result in your insurance being invalidated, a fine, or even a prison sentence. 

You may also be added to the Insurance Fraud Register, which is used by insurers whenever someone makes an application. This could make it harder to take out insurance in the future. 

How to report suspected insurance fraud

The best way to tackle insurance fraud is by reporting it. You can do so via the Insurance Fraud Bureau on its confidential ‘cheatline’ on 0800 422 0421 or at insurancefraudbureau.org.

If you think you’ve been the victim of insurance fraud, you will need to report it to Action Fraud on 0300 123 2040, or at actionfraud.police.uk. 

Ursula Jallow of the Insurance Fraud Bureau (IFB) says: 'With a rise in detected fraudulent insurance applications and claims, it's never been more important to raise awareness about the impacts of insurance fraud. 

'We urge anyone with evidence of an insurance scam to report it to our confidential cheatline.'

•  Find out more: how to find cheap car insurance

How to keep the cost of your premiums down

Lying to an insurer is never worth the risk, however high prices have risen. Here are five legal ways to ensure you get the cheapest premium possible. 

1. Compare policies and prices: no two policies are the same, so you’ll want to compare insurers and shop around. Comparison websites make this easy, but not all insurers are listed on them. 
2. Never auto-renew: when your policy is up for renewal, take a look to see what other insurers are charging for similar products. It may be the case that it’s cheaper to switch. If you don’t want to, ask your insurer if it will reduce your renewal price.
3. Increase your excess: if you increase the excess you have to pay in the event of an insurance claim, your overall premium may go down. Just make sure the excess is still affordable.
4. Look into black box technology: also known as telematics, this can be an option for drivers looking to lower their costs. It’s usually recommended for younger drivers who face the highest average premiums. If you can consistently show your insurer you are driving well, your premium may go down.  
5. Get rid of unnecessary extras: there's a huge range of insurance policies available, and most have a range of add-ons you can pay for. Look at your policies and check you’re using these extras, if you have any. If not, you can remove them and cut the cost of your policy.

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