A league table of the most common fraud risks impacting UK insurance companies is to be compiled by the ABI in a bid to tackle the growing problem.
During 2007, the ABI's fraud committee will create a list of the top 10 most likely risks relating to fraudulent claims.
Allianz claims fraud manager Mihir Pandya is leading the fraud threat assessment on behalf of the committee.
He said: "It is still in the early days, but where this work stream will take us is getting a better handle on the exposures we face and also on fraud typology."
The assessment's results are intended to allow each insurer to identify its own risks and enable it to prioritise limited resources to better handle those risks.
“Every insurer needs to understand as individual companies what its risk profile is in terms of fraud and this big piece of work will allow them to do that better
Mihir Pandya, Allianz claims fraud manager
"Every insurer needs to understand as individual companies what its risk profile is in terms of fraud and this big piece of work will allow them to do that better." Pandya added.
The project comes as the ABI revealed that fraudulent claims are now costing insurers and customers more than £4m every day.
According to initial figures, the ABI research estimates that the annual cost of insurance fraud is £1.6bn. As a result, it adds nearly £40 to the average premium paid each year by policyholders.
Nick Starling, ABI director of general insurance and health, said: "These figures highlight that greater deterrents, such as criminal prosecutions, are needed to discourage fraud. This is why we are calling for police forces to be given more resources so that fraud can be treated with the seriousness it deserves."
Additional funding has not been promised by the government, but attorney general Lord Goldsmith, who is leading its fraud review, confirmed last week that he has commissioned work to design the details for a National Fraud Strategic Authority.