The Home Office has announced a new charter with the insurance sector to “crack down” on fraud.

The department said the voluntary agreement would target fraudsters “seeking to manipulate the insurance market with bogus claims and duping innocent people into buying fake insurance policies”.

It added that the charter includes pledges to “identify and address loopholes, enhance collaboration and improve victim support”.

The Home Office said the charter covers the “vast majority of the insurance sector”, ranging from “general insurance firms to underwriters”.

It comes as fraudulent insurance claims detected by the Association of British Insurers (ABI) topped £1.1 billion in 2023, a 16% increase in the number of detected claims compared to the previous year.

Not only do honest customers face higher insurance premiums but these fraudsters do not care if people are harmed in the pursuit of profit

The Home Office said crash-for-cash scams, where fraudsters orchestrate accidents, were becoming a “significant issue”.

The Insurance Fraud Bureau is currently investigating over 6,000 suspected fraudulent motor insurance claims, which could be linked to crash for cash scams, in total, this is estimated to be worth over £70 million in potential fraud.

The charter, announced at the latest Joint Fraud Taskforce meeting, includes pledges to identify policies exploited by “illegal insurance intermediaries”, people pretending to be a broker or selling completely fake insurance to customers.

It also pledges to strengthen data security measures to stop fraudsters using customer details to target people, as well as to review the tactics and websites used to promote bogus insurance offers.

The National Crime Agency’s national assessment centre is also carrying out a review into the role of professional enablers in the insurance sector, where someone provides false evidence to support a bogus insurance claim.

Lord David Hanson, Home Office minister with responsibility for fraud, said: “Fraud is an appalling crime, and we are determined to crackdown 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.”

Temporary Assistant Commissioner Nik Adams, from the City of London Police, said insurance fraud was “not a victimless crime”.

Mr Adams added: “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.”

According to the latest ONS crime survey statistics, fraud is the most common crime in England and Wales and one in 16 adults experienced fraud in the 12 months to the end of June 2024.

Hannah Gurga, ABI director general, said insurance fraud remained “an ongoing threat that corrodes trust in society and undermines our economic prosperity”.

The Home Office said the charter has the backing of the British Insurance Brokers’ Association, London & International Insurance Brokers’ Association, Lloyd’s of London, Lloyd’s Market Association and the International Underwriting Association, alongside ABI.