Insurers crack down on 'lost suitcase syndrome'

This weekend marks the end of the peak summer holiday season - and the start of a boom for bogus travel insurance claims.

A staggering one in three travel claims is believed to be fraudulent or exaggerated, according to last week's Insurance Times magazine, making it the most-abused area of insurance, costing some pounds 50m a year.

The biggest problem area is fake claims for "missing" baggage and valuables. Almost half of all holiday cover claims (45 per cent) are made for lost or damaged luggage, or stolen valuables. No one knows how many of these are false, but it is an area ripe for abuse: losing baggage is a common problem and hard to investigate.

The Association of British Insurers says the worst case of "lost suitcase syndrome" was a man jailed for 18 months after he claimed for 33 lost cases in 18 months.

He had extracted pounds 85,000 from insurers for "lost" cases taken from trains, planes and motorway services - the common link was that each allegedly contained scuba diving gear.

Some insurers want to see baggage cover removed from travel policies, seeing it as something that should be covered under home contents insurance. At the moment baggage is usually only covered under comprehensive all- risks household policies. Most people don't know if they have this or not, so even if you have cover on both a travel and home insurance policy you will probably make the claim to the travel insurer. The travel firm will then get a contribution, where relevant, from your household insurer.

If you don't have travel insurance and your home policy doesn't cover baggage, you won't get much joy from an airline if your suitcases really do go missing in transit. Under the Warsaw Convention, airlines only have to pay pounds 15.98 for each kilo of lost luggage. If your 18 kilos of clothes and souvenirs are lost, that's under pounds 300 in compensation - not much for people coming back from shopping sprees abroad.

If you have travel insurance, don't claim from the airline and from the insurer. You can only be paid once for your loss - and the insurer is likely to pay out more than the airline.

For example, World Cover Direct offers up to pounds 1,500 for loss of baggage and valuables in a single trip. World Cover's brand manager, Nicola Beetham, says: "Problems include baggage never turning up and items stolen en route. People try to remember what was in there and may come up with exaggerated claims."

All this shows why you may struggle to persuade an insurer that your lost baggage claim is valid. You will need lots of supporting evidence. If you are coming back from holiday, make a list of your purchases contained in each case, and their cash value.

Ms Beetham suggests keeping all receipts when you buy valuables you take on holiday. This will help prove you really did have a camcorder, rather than a disposable camera, in your bag. You should also have valuation certificates for jewellery you take abroad.

All this bureaucracy helps to weed out the frauds, but it can also hit genuine claims from people who don't obsessively keep receipts. Data from insurers Columbus Direct shows that one in 15 claims is abandoned because the policyholder is put off by all the documentation you have to produce.

In case you have ideas about getting your insurer to help pay for your summer break, don't bother. The ABI has launched a crackdown on fraud and has an anonymous hotline for the more honest of us to grass on the hoaxers (0800-328 2550). Fraud adds a whopping 10 per cent to our travel insurance premiums. So if someone you know is boasting how their "Rolex" was stolen, get dialling.

n The ABI has a useful website: www.abi.org.uk