One in ten adults admits to having cheated on an insurance claim. Research out this morning from the Association of British Insurers (ABI) reveals that dishonest customers are scamming insurers out of more than £4 million a day.

The annual cost of insurance fraud to the industry is estimated to be around £1.6 billion. This adds nearly £40 to the average premium paid by honest policyholders.

The new findings dwarf figures released by the Association of Chief Police Officers in March, which put the cost of fraud to the whole financial services industry – including banks – at £1 billion.

The ABI interviewed nearly 7,000 adults as part of their study into fraud. The home was found to be the richest source for insurance cheats, with around half the cost of dishonest claims occurring under home contents and buildings insurance.

Opportunistic fraud – committed by someone who “bumps up” the price of damaged goods or exaggerates injury, for example – costs insurers more than £800 million a year. Common claims are for deliberate spills or cigarette burns on carpets or sofas.

In one of the more shameless cases cited by the ABI, a man supposedly unable to walk following an accident was photographed in his local newspaper collecting an award for leading goal scorer in a football team.

Nick Starling, of the ABI said: “Honest customers should not have to pay for the cheats.

“Insurers are committed to reducing the fraud problem. We are devoting greater resources to weeding out the cheats, and working together to detect and combat fraud.

“These figures highlight that greater deterrents, such as criminal prosecutions, are needed to discourage fraud. This is why we are calling for police forces to be given more resources so that fraud can be treated with the seriousness it deserves.”

The Insurance Fraud Bureau was launched in July 2006 to fight insurance fraud and operates a free and confidential helpline on 0800 328 2550 for anyone with information on suspected cheats.

Times Recommends

• How to sell your home in a downturn
• How to boost your spending power
• Unemployment benefits explained