Katy Dowell looks at the task facing the Insurance Fraud Bureau
Everyone knows someone who has made an exaggerated claim against an insurer. It is a common practice which, although immoral, is widely accepted by society. But what if motorists knew that exaggerating a claim helps to add an extra 5% to every motor premium sold in the UK? The launch of the Insurance Fraud Bureau (IFB) is widely expected to impact opportunistic fraud. But first it must crack the sophisticated fraud rings operating in the sector.
The day of the IFB's launch started early for John Beadle, chairman of the IFB and Royal & SunAlliance's counter fraud manager. He appeared on BBC television at 5.30am, before being interviewed on Radio 4's Today programme.
Fraud, it seems, is the insurance sector's juiciest subject.
The IFB has some great headline grabbing statistics - fraudulent claims are thought to cost £1.5bn, and who pays for this? Well, that 5% extra on your motor premium is a start. The ABI estimates the number of road accidents caused by fraud gangs will rise to 2,500 a year by 2010, up from 1,000 in 2005. And, of course, many involve innocent people.
While fraud affects the entire financial industry, the ABI has been first out of the blocks in the creation of a fraud detection agency.
Those involved are getting a great big slap on the back from the FSA. The Serious Organised Crime Agency (Soca), the Fraud Advisory Panel, the City of London Police and the Asset Recovery Agency are also queuing up to congratulate John Beadle and the ABI for taking the initiative.
So isn't the insurance industry doing a marvellous job?
Well, on the plus side, for the first time in recent history insurers are sharing information and are happy to do so. Anything which will help to control claims can only be good for the shareholders.
But can it be good for the consumer? Will motorists suddenly find their premiums cut because thousands of fraudsters have been caught and locked up? For the short term, at least, the IFB cannot actually commit to anything.
The backslapping may continue for some time, but unless the bureau is able to produce results it could be a nightmare for the ABI.
There is a lot riding on the IFB, not least by the insurers who have dedicated money and resources to it.
But for now we can only assume that, like Soca, the IFB is working hard behind the scenes. Who knows, this time next year we could be awaiting some major fraud trials. IT