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Member, Beacon International Group, Ltd.
LONDON (Reuters)—Britain's insurers have agreed to pay £9 million ($14.5 million) to fund a new police unit dedicated to combating insurance fraud as the industry grapples with rising bogus claims, City of London police said Tuesday.
The 35-strong force is tasked with tackling a crime that costs the insurance industry £2 billion ($3.21 billion) a year, adding £44 ($70.63) to the average consumer's premium payments, according to the Assn. of British Insurers.
An ABI spokesman said figures for 2009, the most recent available, showed that between 4% and 5% of insurance claims were fraudulent, an increase on the previous year.
Insurance fraud typically rises during economic downturns as cash-strapped individuals and businesses seek to bolster their income by filing exaggerated or wholly fictitious claims.
Some of the recent increase in insurance fraud also could reflect improved detection rates, the ABI spokesman said.
The new police unit will form part of the economic crime directorate of the City of London police, which oversees the capital's financial district, and will be up and running in January 2012.
The anti-fraud force will cost ABI members £2.9 million ($4.7 million) a year for the next three years, a City of London Police spokesman said, and will be reviewed after two years.
The unit will complement the efforts of major British insurers' in-house fraud detection teams, which are often staffed by former police officers.
RSA, Britain's biggest commercial insurer, employs about 20 ex-officers on its anti-fraud team, a company spokesman said.
The National Insurance Crime Bureau in a recent report identified the 10 types of insurance policies that generate the most questionable claims—those insurers referred to the organization for additional review based on one or more potential indicators of fraud.