Insurance associations have voluntarily agreed to sign up to the charter, which aims to stop the rising number of scams on insurance products.
In 2023, there were 84,400 fake insurance claims amounting to £1.1bn – a rise of 16% on the year before.
One area the charter hopes to stop is the prominent issue of ‘cash for crash’ scams, which currently has 6,000 ongoing suspected cases.
These occur when a deliberate crash is caused and claimed to be an accident in order to gain cash from a claim. This issue is estimated by the Government department to be worth up to £70m in potential fraud.
The Home Office is keen to end this “reckless” practice, which “puts innocent lives at risk”.
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As well as halting cash for crash fraud, the charter also pledges that the National Crime Agency (NCA) will review ‘professional enablers’ in the industry who give false evidence as part of the fraudulent insurance claims.
It will also identify policies that are sold by illegal insurance intermediaries who sell fake insurance policies while purporting to be a broker.
The charter will cover “the vast majority” of the sector, including general insurance firms and underwriters.
‘Honest customers face higher insurance’
David Hanson, minister of state at the Home Office with responsibility for fraud, said: “Fraud is an appalling crime, and we are determined to crack down on these callous criminals. Not only do honest customers face higher insurance premiums, but these fraudsters do not care if people are harmed in the pursuit of profit.
“This charter is an important step, and we will continue to work with industry and law enforcement to better protect the public from fraud.”
The Association of British Insurers (ABI) is one of the organisations, alongside Lloyds’ of London and others, to back the charter.
Hannah Gurga, ABI’s director general, said: “Insurance fraud remains an ongoing threat that corrodes trust in society and undermines our economic prosperity. Tackling insurance fraud is an industry priority, and requires a collaborative approach between private and public sector.
“We’re delighted to have agreed the Insurance Sector Fraud Charter with the Home Office, boosting the industry’s resilience and ability to fight fraud.
“We look forward to continuing to work with the Home Office and other industry signatories to implement the charter commitments.”
The City of London’s temporary assistant commissioner Nik Adams welcomed the charter.
‘Insurance fraud not a victimless crime’
Adams said: “Insurance fraud is not a victimless crime. It increases the cost of premiums for honest customers, while fraudsters who sell fake car insurance or deliberately cause road traffic collisions to claim compensation put motorists at risk.
“The Insurance Fraud Enforcement Department, a partnership between law enforcement and industry, is at the forefront of tackling this crime.”
Adams added: “This charter is another step forward in establishing a whole system approach to combatting fraud, as it is a commitment from organisations across the insurance sector to join law enforcement in tackling key threats, enhancing criminal justice outcomes and improving victim support.”
