Real tans and fake claims

One in three of the holiday makers who makes a claim on their travel insurance this summer could be trying to defraud their insurer, writes Steve Lodge.

The most common frauds are inflated - rather than completely bogus - claims for thefts and losses. But they can also involve medical treatment that a policyholder did not have, or even fabricating accidents or relatives' deaths to claim for cancellation of a holiday.

Travel insurance is probably the most fraud-ridden of all insurance markets. Bogus claims have been estimated to cost travel insurers pounds 50m a year out of the less than pounds 400m they pay out. Around one in 20 holiday makers makes a claim.

Travel insurance fraud reached "epidemic" proportions in the early 1990s, according to Home & Overseas, the insurer behind policies sold through Thomas Cook, Thomsons and several banks including NatWest and Barclays. But, according to Sarah Joannides, marketing manager at H&O, insurers may have capped the problem.

An industry database has been proposed to check if, for example, someone has already claimed for a camera they say has been stolen. Other measures include infra-red technology to check receipts have not been tampered with and using local agents and even Interpol to check claims.

Most fraudulent claims have some truth, but insurers emphasise that exaggeration is as fraudulent as complete fabrication. Making more than one claim for the same loss is also common. The principle of insurance is that it should compensate policyholders for loss, but not make them profits, says the Association of British Insurers. So you cannot claim twice for the same loss, even if you have two policies.

Another area involves people going on holiday expressly to get medical treatment for existing complaints using the private cover available under travel insurance. And widespread access to personal computers has led to an escalation of frauds involving fake receipts.