Travel insurers should clamp down on the summer surge of fake and exaggerated claims by excluding baggage cover from policies, a leading intermediary has said.
The industry is currently bracing itself for the seasonal jump of fraudulent claims, which costs an estimated £50m a year and adds ten per cent to premiums.
Baggage, which accounts for nearly half of all claims, is notoriously difficult to investigate, but the easiest to fake.
Steve Howard of the Association of Travel Insurance Intermediaries says the answer could be to exclude baggage from many policies.
“A vast number of holidaymakers will be covered for baggage under their household insurance policy,” he said.
“The only reason why holidaymakers believe baggage is now essential for their cover is because the industry has collectively leapt on to the bandwagon.” Insurers are viewed as a soft target by many holidaymakers seeking to recoup money after an expensive trip abroad.
One in three of all claims is believed to be partly invented, making travel the most fraud-ridden of all insurance.
The best known scam involves two accomplices. On returning to Britain one picks up all the bags from the luggage carousel and takes them through customs.
The other fraudster then reports the bag stolen.
Under the Warsaw Convention, airlines will only pay £15.98 per every kilo of lost bags leaving the insurance industry to pick up the rest of the tab.
In some cases, fraudsters stuff bags full of newspapers.
Howard points out that travel insurers usually reclaim some of the outlay from the household insurer because it is the primary provider.
“I have been calling for more travel policies without baggage cover for many years but without much success,” he said.
“Unfortunately it has become the norm and so some people now believe baggage cover is more important than medical cover.”
The travel insurance industry has been making moves to clamp down on fraud recently.
Suzanne Moore, spokeswoman for the ABI, says the effort has galvanised foreign police who have become far more vigilant.
But Richard Lamberth, managing director of Agency Underwriting, doubts baggage exclusions could become the norm.
“Firstly there is too much competition in the market, and secondly consumers now expect it,” he said.
“We have an exclusion for baggage on a backpacker policy but consumers are just not interested, even if they can see the premium reduction.
“If baggage was not included in a policy, premiums could drop by as much as 25%.”
British Airways alone receives 300 claims a day for damaged baggage, and has been criticised for having slack control.
One expert says the airline accepts claims from passengers when they get home, but often only requiring only a note from a retailer of the cost of repairing the damage as proof.
“The loophole could be costing insurers thousands of pounds in fraudulent claims,” he said
BA spokeswoman, Gwen Jones, denied the airline had a problem with fraudulent baggage claims.
“We use very sophisticated techniques to detect fraudulent claims.
“We are not under any pressure from insurers.”