Direct Line has slammed the insurance industry for its uncoordinated approach to fraud alleging that more needs to be done to combat the £650m-a-year problem.

Bill Trueman, who is in charge of Direct Line's anti-fraud drive, said insurers remain extremely vulnerable to bogus claims because they do not pool enough claims data.

He said the industry needed to do more to strengthen its systems of fraud detection. "The industry hardly shares any claims data. Where they do it's on an ad hoc basis," he says.

A high-profile fraud case includes the Sharif family from Preston who staged £3m worth of bogus claims after staging seven multiple car crashes.

Direct Line, which is Britain's biggest motor insurer with 2.8m policyholders, has become the first insurer to install the Hunter fraud detection system for claims. It is also being considered by Churchill and Royal & SunAlliance.

The internal computer system works by screening claims applications for recurring data, for example matches in names, addresses and vehicle registrations.

Indira Vohra, one of Direct Line's four Hunter technicians, said the system has so far detected £100,000 worth of bogus claims since it went live last August.

But information giant Experian said Hunter should not be seen as a replacement for CUE, the industry's system for pooling data on insurance claims.

Sue Hall, director and general manager of Experian's insurance division, said CUE was being updated so it could provide on-line data at the point of sale.

However she stressed that the onus was on insurers to incorporate the technology into their existing systems.