The insurance industry is preparing to make submissions to a government committee in a bid to increase the resources put into investigating and prosecuting insurance fraudsters.

The move follows the announcement by the government of a "wide-ranging" review into the scale of fraud in the UK and the way it is handled.

The review, led by the Treasury, will address issues such as the role of government and industry in tackling fraud and its prevention, investigation and punishment.

The insurance industry has for a long time been critical of the low priority given by the police to the investigation of insurance fraud, as there are no targets in the national policing plan.

The review gives the industry the opportunity to argue for a change to this. Insurers, including AXA and Norwich Union, and the ABI are working on responses to the review team.

AXA fraud risk manager Richard Davies said the review had come at a "perfect time" given the insurance industry's work on developing the Insurance Fraud Bureau (IFB) and the anti-fraud database.

He said that a "proper response from the police and justice system" was needed to the outcomes of the industry's analyses of fraudulent activity using the database and the IFB.

A Norwich Union spokesman said: "We are looking for a national fraud strategy. The review will give greater visibility to the crime of fraud."

FSA financial crime sector leader Philip Robinson said: "What the industry has here is a once in a lifetime opportunity to address the fraud problem. It has an opportunity to put its case strongly and I encourage the industry to really engage with it."

The review is the third in a series of measures announced by the government this year to address fraud. In May, the Fraud Bill proposed a single offence of fraud to address concerns over the complexity of the current law and the difficulty in achieving convictions. And later in the year, the government announced plans to allow complex fraud trials to be heard without a jury.

But Davies Arnold Cooper partner Nicholas Young down-played the significance of the latest review saying that insurance fraud would not be the main focus. "I would be very surprised if routine insurance fraud were high on the list."

He said the insurance industry should concentrate on the Law Commission's review of insurance contract law, slated to begin next year.

The commission has said it will examine the law of non-disclosure and breach of warranty, which is described as "outdated" by some.

A scoping document is set for publication next year.

Counting the cost of fraud
The UK government estimates that fraud costs the economy over £14bn

The ABI estimates that insurance fraud costs the industry £1bn a year.

Organised crime is estimated to cost the industry £50m

Commercial insurance fraud in the UK business community costs at least £550m a year

The industry's anti-fraud database could save over £50m a year - possibly as much as £200m a year.