Insurers have been uncovering a growing number of cases of “front-end fraud”, where the customer has lied or failed to disclose material information to get cheaper insurance, says the ABI.
Common deceptions include parents adding their son or daughter to their motor policy as an occasional driver, when they are the main driver.
Another is not disclosing motoring convictions, ranging from speeding to drink driving.
In one case, a policyholder had his £7,000 claim for a stolen vehicle rejected when it was discovered that he had failed to disclose two convictions for driving without insurance.
Other scams include under-estimating alcohol and tobacco consumption and failing to mention previous claims, such as motor accidents and burglaries.
Nick Starling, director of general insurance and health, said: “Honesty is the only policy. Cheating to get cheaper insurance puts your cover in jeopardy, with potentially disastrous consequences. Being truthful and shopping around will mean that your insurance delivers when you need it, and that you get the best possible deal.”