'Cheats' claim £1m a day

Insurance firms are uncovering fraud worth over £1m a day, reports the Association of British insurers (ABI) – nearly three times the level recorded in 2003.

By far the most common type of fraud uncovered by investigators and claims handlers involves people exaggerating the scale of insured losses. Typical scams exposed also include deliberately damaging carpets then claiming it was accidental.

But according to the ABI, the fraud uncovered is just the tip of the iceberg, it estimates that one in 11 claims are dishonest in some way and that fraudsters get away with an estimated £1.6bn a year. This adds an average £40 a year to the premiums paid by honest customers.

But Nick Starling, director-general of the ABI, says detection methods are improving. "Insurance cheats are more likely to be caught than ever before. And they will pay a high price as future insurance and credit will be more expensive and harder to obtain."