Fraud detection system CIFAS saved insurers and banks a record £203m last year, but saw false identity fraud rocket by more than 460%.
It detected 23% more fraud last year than in 1999. Despite this success, CIFAS said fraudsters were continuing to attack the UK's financial services and managing to conceal their own identities.
Cases of fraud involving people using false indentities soared from just over 2,000 in 1999 to 12,300 in 2000, costing CIFAS members more than £157,000.
Victims of impersonation jumped by 24.5% from 18,000 to more than 22,500 cases over the same period.
CIFAS claims the UK is handicapped by its lax laws on personal identification compared to European countries that insist on the carrying of personal identity cards.
However, CIFAS said its fraud avoidance system was showing results. It claims to have prevented 30% more frauds at the application stage and has matched 50% more data than last year. Insurance fraud is becoming an increasing area of concern for CIFAS after it admitted its first insurance members last September.