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YOUR MONEY Steve Lodge looks at efforts to combat the pounds 50m 'ritua l' of travel insurance fraud

Travel insurance fraud is running at "absurd" levels in Britain but the country's leading travel insurer says that offenders are now less likely to succeed.

The warning comes as insurers expect to process more than 100,000 claims on policies for the recent summer holidays - a third of which are thought to contain some bogus element.

Home & Overseas, which is behind insurance policies sold by Thomas Cook, Thomsons and many of the banks, estimates in a study that the industry as a whole may have received 150,000 fraudulent claims last year totalling up to pounds 50m. Early indications from claims for this summer show no let- up.

Sarah Joannides, marketing manager of Home & Overseas, says submitting a false claim is now a "perennial ritual" for a substantial minority of holidaymakers. It is estimated that one in three claims contains some element of fraud, most commonly in the form of an inflated value for lost or stolen possessions.

She says: "Defrauding travel insurers has reached absurd levels. Our records show that Britons lose more Louis Vuitton luggage abroad than is ever actually sold in the UK."

The study's estimate of pounds 50m of fraudulent claims last year is little changed from its analysis for 1994. As many as half of all claims for personal possessions were inflated or completely bogus last year. The average claim for theft or loss was for pounds 160.

Home & Overseas says nearly one in five medical claims - which average pounds 430 - is in some way dishonest. It reports an increasing number of people travelling abroad expressly for specialist treatment, and a growing incidence of falsifying fatalities abroad - sometimes by buying or forging death certificates overseas - to claim the death benefit available on most policies.

Bumping up the value of claims by including items not actually lost, or by exaggerating the cost of possessions that have been taken, is the most common fraud. It is common practice for fraudsters to claim for an expensive camera rather than a cheaper model, or to overestimate the value of clothes lost. Ms Joannides says the latest trend is to claim falsely for designer items like Gucci clothes, Ray Ban glasses and Rolex watches.

Many frauds involve falsified or doctored receipts, which are normally required by insurers as proof of the value of medical costs or lost or stolen goods. Home & Overseas believes there are more and more professional fraudsters in some destinations who counterfeit receipts and police reports to sell to tourists.

Insurers warn that fraud pushes up insurance costs for the honest majority, and insist that none of this is a smokescreen to avoid paying genuine applicants. They also claim to be tightening up their fraud detection methods. There is still no industry database to check, say, if someone has already claimed for a camera they say has been stolen. But, for example, Home & Overseas says it has set up a computerised claims system, called Chess, which should help it highlight frequent claimants and other potential frauds.

The company also reveals a number of indicators that insurers look for in uncovering fraud. These include:

q How long after the holiday booking the insurance policy was bought. If it was several weeks later, it could be that the holidaymaker had found out he would have to cancel the trip and was thus taking out a policy specifically to claim for the cancellation.

q Altered receipts or certificates. Insurers are increasingly using infra- red technology to uncover changes.

q The absence of original documentation. Insurers use local agents and even Interpol to check the truth behind unsubstantiated reports.

q The make and number of lost or stolen articles being claimed for. Excessive camera equipment or jewellery can set alarm bells ringing.

q Differences in the weight of suitcases recorded by the airline on outward and return journeys. Holidaymakers who claim to have lost everything often seem to come back from their trip heavily laiden, says Home & Overseas.

Travel cover is believed to be the most fraud-ridden of all types of insurance, with a greater proportion of claims containing some bogus element. Some fraudulent claims are also bizarre. Home & Overseas reports a recent case where a man cut off his thumb after being robbed to inflate his claim for personal injury. The fraud came to light after the same claim was submitted to more than one insurance company.