'Co-ordinated industry message' called for to educate consumers

The ABI has not ruled out proposing an industry-funded advertising campaign to educate consumers about the cost of insurance fraud.

Chris Hannant, the ABI's head of financial crime prevention, said a number of options were being mooted as a way to combat the growing problem of fraud. Another option under consideration, he said, was using individual insurers to communicate fraud education messages to their own customers.

"Advertising is expensive, but we need a co-ordinated message from the industry," he said.

Hannant said the insurance industry needed to persuade customers that they would, even in low value frauds, be caught. Consumers also needed to realise it was in their own interest not to defraud insurers or exaggerate claims, given the impact it has on premiums, he said.

According to ABI figures, insurance fraud adds 5% to insurance premiums and equates to £650 a year for the average household.

Hannant said the traditional declaration at the end of a quotation form threatening avoidance for non-disclosure of material information was a "negative" way of looking at fraud.

"We need to show why fraud affects consumers," he said.

An anti-fraud campaign, using an advertising campaign and whistle-blowers hotline, has been successful in the Republic of Ireland. Last year, the ABI sent a representative to Ireland to examine whether the campaign could be replicated in the UK.

A total of 2,368 cases of suspected fraud were reported to the Irish hotline since the campaign launch in February 2003.