William Kay: Insurance cheats play a game that can only end in tears for us all

Insurance fraudsters, and that probably means you, can give the Association of British Insurers an ironic salute for so helpfully publishing this week a guide to squeezing the maximum out of your insurance policy. The ABI reckons cheating on insurance, particularly travel and household contents, costs more than £1bn a year, most of which is simply loaded back on premiums, so that encourages even more people to earn themselves a "rebate" by making fraudulent claims.

Only 7 per cent of policyholders admit to such skulduggery, but nearly half would not rule it out. At least, that's what they told pollsters: I suspect the first figure is an underestimate and the second a piece of macho exaggeration. They are, the ABI says, just the sort of middle-class people insurance companies love to recruit. Typically, male, married graduates, in full-time work and owning their home.

And look what they get up to. Deliberate "accidents", invented burglaries, minor scratches turned into chronic injuries. When a child accidentally knocked a television off a table, the screen cracked. It was still working, so his father picked it up and slammed it on the floor to make sure it was properly smashed. Another chap, supposed to be unable to walk due to back problems, scored an own goal when he was photographed playing for his local football team.

Best of all, a taxi-driver had pretended to be crippled following a motor accident but was still taking fares. He made the mistake of walking out on his wife hours after collecting £385,000 in compensation. She phoned the insurer.

Naturally, I could not condone such behaviour: fiddling the insurance, I mean, not blowing the whistle. It is ultimately self-defeating. Insurers have lost money on their policies for a long time, making up for it with profits from investing the premiums. In the end, so many people will be fiddling that premiums will have to rise to deterrent levels or insurers will withdraw from the market. Already insurers are increasing policy excesses, the level of claim below which they will not pay. The game may be fun while it lasts, but it won't last.

* I fear the responses to the pensions Green Paper, many of which have been landing this week on the desk of Andrew Smith, the Secretary of State for Work and Pensions, are destined for the dustbin. With one or two exceptions, they fail to recognise the political motives behind the Government's reforms. The most popular technical criticism has been that the proposed £1.4m cap on individual pension pots includes what must be the unpredictable element of growth in the underlying investments. The limit should be defined purely in terms of contributions, even if it is set lower. Although £1.4m seems a ludicrously high ceiling at present, if the inheritance tax threshold of £255,000 is anything to go by, it will soon be clawed down to affect most of us, even at today's modest inflation rate.

As Jerome Melcer, of BDO Stoy Hayward points out, a similar wheeze is being used to restrict the right to draw down capital from a pension pot. That could be ruinous, particularly for those who have been relying on it for years. But I fear its patent unfairness will not inhibit this Government's rapacious tendency.

* If Britain is a nation of pet-lovers, our loyalty to our furry and feathered friends will be sorely tested. Animal Friends Insurance says a House of Lords decision means many animal owners must have public liability cover to avoid potentially frightening legal claims. The verdict extended the scope of the 1971 Animals Act to many more situations in which owners are strictly liable for their pets. Strict liability means the owner does not have to be negligent or at fault: if the pet causes damage or injury, they must pay. This affects mainly the actions of horses, dogs and cats. But as personal injury claims can cost millions, it puts a different aspect on letting your pet roam free, even in open land.