Simon Read: What kind of fool makes these claims?
Saturday 18 April 2009
Insurance fraud has become big business in the recession. Insurers are currently getting more than 2,000 false claims a week while around 107,000 claims worth 730m were discovered to be false last year, according to the Association of British Insurers. That was a leap of 30 per cent in value over 2007.
Let's be honest about this, the figures don't suggest that an army of fraudsters has sprung up to rip-off the big insurance companies. No, the reality is that false claims come from normal folk like you and me. And as money gets tighter as the recession bites the temptation will grow to add a little extra to a claim, or even make up a fictitious accident or theft.
Insurers know that policyholders are more likely to be creative with claims in a recession. Roy Hebburn, claims manager at Allianz, told me: "The number of fraudulent claims increases as people struggle to cope financially. People fail to acknowledge that committing insurance fraud is a serious offence."
It's easy to pretend that there are no victims of insurance fraud, only the faceless insurance companies. But we all lose out by having to stump up for more expensive premiums. And people who do put in fraudulent claims are breaking the law. Worringly, research by the ABI shows one in five people would consider making a fraudulent insurance claim in the future, despite the threat of a criminal conviction. To my mind, anyone taking that risk is a fool.
Which brings me nicely to the Chancellor of the Exchequer, Alistair Darling, above, who will be announcing this year's Budget next Wednesday. I've been awash with Budget predictions and wish-lists for some time, but there's very little anticipation of good news for struggling families this year.
However, there are a couple of simple actions Darling could do which would be cheered by millions. For starters he could help the stagnant housing market by switching the onus for Stamp Duty from the buyer to the seller. This wouldn't cost the Treasury a penny but would save first-time buyers from having to pay the tax, encouraging many to move ahead with buying plans.
Then he could encourage savers by increasing the amount they can stash away tax-free each year in an Individual Savings Account. "The Chancellor should increase the amount of annual investment in an ISA to 12,000 with half being in cash," suggested Andrew Jupp, head of tax at Tenon Group. "With rates of return on most savings being so low at the moment, there needs to be a real incentive for people to save. Permitting half of the investment to be in cash will allow people easy access to their savings if they need it in the future," he said.
It's a dead cert that Darling won't adopt either of those suggestions. Instead he's likely to bring bad news in the form of increased personal taxation. "We are likely to see a dramatic hike in taxes," warns George Bull, head of tax at Baker Tilley. "The Irish have already proposed dramatic tax increases for middle-earners in their Budget. We must now wait to see whether our own Chancellor will follow suit, perhaps announcing new higher rates of tax or accelerating the increase to 45 per cent already in the pipeline."
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