Premiums for holiday and household insurance could fall after the Government announced a new crackdown on fraudulent claims.

Justice Secretary Chris Grayling has confirmed a new taskforce will be set up to radically cut insurance fraud, which costs the industry billions of pounds a year – and adds £50 a year to the average household bill.

The Daily Telegraph reports that the most common type of fraud in the household insurance market is believed to be exaggerating the value of a claim after a burglary.

Claims are being made for higher-value goods than were actually stolen while completely false claims for non-existent items are also being submitted.

Similar reforms are being made in the motor insurance market – designed to combat bogus claims for whiplash injuries – led to a significant drop in premium costs, according to industry figures.

The customer is expected to see similar benefits on other types of policies if the new taskforce is a success.

Mr Grayling told The Telegraph: “The Government has taken big steps towards reducing bogus whiplash claims but the problem needs to be addressed more widely beyond motor insurance.

“And I believe there is scope to consider a broader number of issues which contribute to claims fraud more widely.”

He added that it was important to tackle the perception among some consumers that insurance is ‘fair game’ and that making a fraudulent claim is a legitimate way to make some money.

Moves to tackle whiplash claims have already seen limits placed on the cost of medical reports but Mr Grayling called on the insurance industry to “step up to the plate” and do more.

According to the Association of British Insurers (ABI), motor insurance premiums in the third quarter of this year fell by £2 to £356 over the previous quarter, and over the last 18 months the average premium has fallen by seven per cent.

Huw Evans, of the ABI, said: “The Government’s commitment to tackle the UK’s whiplash epidemic is welcome, but more still needs to be done – including raising the small claims track limit – to tackle the issue.”

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