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Last Updated: Thursday, 18 October 2007, 09:54 GMT 10:54 UK
Fraudulent insurance claims rise
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Fraudulent insurance claims are rising sharply and honest policyholders are suffering as a result, the industry's trade body has revealed.

One in 11 claims is false, according to the Association of British Insurers (ABI); three times as many as in 2003.

False household insurance claims, such as self-inflicted damage to carpets, account for more than half of these.

The ABI added that truthful customers are suffering from such deception with an average 40 being added to premiums.

Fighting insurance fraud is costing the industry 1.6bn a year, the ABI said.

'Acceptable crime'

The scale of false claims detected by insurers has spiralled to 480m a year.

In about 85% of such claims, the value of goods which have genuinely been lost is being exaggerated.

False claims cost the industry 1.6bn
25% of motor claims in London are thought to be fraudulent
Scotland has lowest rate of false car claims

The ABI said past research suggested that some people regarded making false claims as an "acceptable crime" because other people were doing it.

Other prevailing attitudes included a feeling that insurers were making huge profits so would not miss relatively small-scale claims.

The ABI said such attitudes were dangerous but insisted the industry was fighting back.

"Insurance cheats are more likely to be caught than ever before," said Nick Starling, the ABI's director of general insurance and health.

"Cheats will pay a high price as future insurance and credit will be more expensive and harder to obtain."

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