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Average insurance scam hits £15k pushing premiums to record highs

Nick Cheek
Written By:
Nick Cheek

Insurance scams in the UK hit a record average of £15,000, pushing up the cost of premiums on car, home and contents insurance, according to an insurance trade organisation.

The Association of British Insurers (ABI) reports that, despite a 19% drop in the number of fraudulent insurance claims uncovered last year, the value of the average scam went up 20% compared to 2021.

This rise was attributed to higher inflation and an increase in property fraud, which shot up by 8% in two years to a total of £134m.

Car insurance cons

Unfortunately for drivers, motor insurance represented the largest volume of scams, with 42,500 cases equating to 59% of total fraudulent claims.

One scammer in London almost took home £50,000 by acting as an illegal insurance intermediary known as a ‘ghost broker’, selling fake insurance policies.

Amid the high number of claims, the average premium for drivers wanting private comprehensive motor insurance rose to £511 in the three months leading up to June 2023.  Yourmoney.com reported earlier this month that car insurance premiums had rocketed to record levels this year.

Customers are now shopping around for new insurance deals. For example, it was reported that UK insurer Admiral had lost 380,000motoring customers in the last year although it still saw profits increase by 4% to £234m.  The current situation meant “tough times for many motorists and motor insurers alike”, according to the ABI’s director of general insurance policy, Mervyn Skeet.

‘Fraud is most reported crime in England and Wales’

ABI head of fraud and financial crime, Mark Allen, said: “While it is good to see the industry’s collaborative efforts delivered results in 2022, there can be no room for complacency. With many households and businesses continuing to face rising costs, now more than ever, honest customers expect insurers to weed out the cheats and focus on paying genuine claims as quickly as possible.

“Fraud is now the most reported crime in England and Wales. As financial hardship increases, previously honest customers could be tempted to ‘act in the moment’ to exaggerate claims.

“These latest figures highlight that some fraudsters are aiming big, with some large frauds uncovered. This shows why there can be absolutely no let-up in pursuing insurance fraudsters. Honest customers rightly expect nothing less. It is also important that consumers remain vigilant to potential scams.”