EXPERTS have warned that travel insurance premiums are being inflated by false claims as a surwwvey revealed one in ten young holidaymakers admit to having fraudulently claimed for items which they were not entitled to.
The report by GoCompare.com found that almost 10 per cent of those aged between 18 and 34 said they had falsified claims – either by inflating the value of an item which had been lost or stolen – or by making up the claim entirely. Over-55s were most likely of all age groups to play by the rules, with just 0.5 per cent admitting they had inflated claims – and none saying they had invented a claim.
The Association of British Insurers (ABI) warned that false claims would push premiums higher for every insured traveller as the cost of insurers paying out for the fraudulent items was passed on to the customer.
“Across the board, insurance fraud is a big problem for the industry, but it is a bigger problem for the customer, who ends up having to pay for this,” said ABI spokesman Malcolm Tarling. “With travel insurance particularly, we have certainly come across fraud in areas such as lost possessions. Faking illness is more unusual as it would be difficult to do, but it is fairly common for people to claim for items they have lost that they didn’t have – or that they are worth more than they actually were.”
Last year, false claims worth almost £1 billion were detected by the insurance industry across all aspects of insurance, but the ABI estimates that a further £2 billion a year goes undetected.
“We believe that insurance fraud is costing the honest customer an average of £50 a year across all of their insurance products,” Tarling added.
False travel insurance claims have included customers claiming for a lost Rolex when they have actually lost a cheap watch, or claiming to replace an expensive string of designer suits “lost” in a suitcase taken on a cheap sun holiday to Torremolinos.
Meanwhile, the survey revealed that more than half of 18 to 34-year-olds surveyed felt that travel insurers hardly ever paid out for claims – but in reality, less than 7 per cent had actually had travel insurance claims turned down.
And nearly 60 per cent of 18 to 34-year-olds feel that travel insurance is too expensive – despite a typical worldwide policy for a 30-year-old going on a two week holiday costing just £14.25.
Caroline Lloyd, travel insurance spokeswoman at Gocompare.com, warned that falsifying claims could leave young travellers with a criminal record.
She said: “Whatever way you look at it, faking a travel insurance claim or bumping up the amount of a genuine claim to make it more worthwhile is fraud and if you’re caught out you might end up with a criminal record and also find it much harder to get other kinds of insurance in the future.
“This could have serious implications when it comes to getting life insurance for a mortgage or insuring a car. For the sake of a few hundred pounds it’s really not worth the risk.”
Earlier this year, the ABI announced details of the creation of the Insurance Fraud Register – a list which allows insurers to share information on known cheats and take their misdemeanours into account before allowing them to take out insurance. The register, which is to be launched later this year, is part of an industry-wide crackdown on insurance fraud, which also includes the Insurance Fraud Bureau, which is funded by the industry.