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Insurance industry tackles fraud

Insurance industry tackles fraud

Category: Car insurance

Updated: 21/11/2013
First Published: 21/11/2013

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Under a pilot scheme due to be launched in February, insurance firms will be able to directly access DVLA information relating to drivers' convictions and penalty points in an attempt to reduce the level of fraud in the industry.

While it's possible to reduce premiums through properly comparing different policies, for many consumers the price is still too high. And it's these honest consumers that are paying the price of fraud – according to the Association of British Insurers (ABI) around 23% of drivers make incorrect disclosures, with this fraud meaning any resulting claims are unnecessarily complex and lead to higher premiums for other drivers.

Under the MyLicence scheme, insurers hope to reverse the culture of false disclosure. Insurers will be able to cross-check information themselves rather than relying on the declarations given by motorists, ensuring the application is genuine and allowing premiums to be priced accordingly.

Theoretically this should cut costs, which would then lead to reduced premiums across the board.

It's an encouraging step for the industry. Stephen Glaister, director of the RAC Foundation, said: "Given that a significant minority of people appear to mislead insurers about their motoring histories, the majority of honest drivers will probably welcome this change in the hope it cuts their premiums.

"The cost of insurance has gone through the roof over recent years and anything that enables premiums to more realistically reflect a motorist's risk and driving record should help bring down the cost of running a car for those who tell the truth."

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* We reviewed the quote requests generated on Quotezone's insurance comparison service between Jan and March 2012. We took the cheapest from the median (halfway point) quote returned to each customer to produce a 'representative' saving. 50% + achieved a representative saving of this amount or more. The savings you could achieve are dependent on your individual circumstances and how you selected your current insurance supplier.

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