Staged motor accidents are one type of fraud

The Insurance Fraud Bureau (IFB), to be headed by a former top policeman, will share intelligence with police forces and government.

Initially, IFB staff are expected to scour 160 million insurance policies for signs of potential fraud, such as staged accidents or arson.

Estimates put insurance fraud at �1.5bn a year, adding 5% to average premiums.

Better detection

Of late, it seems insurers are getting better at detecting fraud.

The growth in organised fraud needs a new approach Stephen Sklaroff, Association of British Insurers

Last year, the Association of British Insurers (ABI) - which is backing the launch of the IFB - said that almost �400m of fraud was detected.

The figure is an increase of 50% on the previous year.

Some insurers have been turning to new technology, such as voice stress analysis, to counter bogus claims lodged over the telephone.

These sort of tactics have helped in the detection of opportunistic fraud such as people lodging excessive claims for damages.

Organised gangs

The IFB, though, will be targeting organised gangs of fraudsters, who - evidence suggests - use their ill-gotten gains to fund crimes such as drug dealing.

"The growth in organised fraud needs a new approach," said Stephen Sklaroff, deputy director general of the ABI.

"The launch of the IFB shows the industry's determination to expose the organised criminal gangs who often use insurance payouts to fund other crimes, and put lives in danger."

Common types of fraud the IFB will be investigating include:

• Staged motor accidents - Fraudsters deliberately stage an accident with an innocent motorist so to put in an insurance claim
• Fake disability - Bogus personal injury claims to hoodwink insurers into paying-out cash to secure state benefits
• Arson - Business owners burning down their premises for the insurance cash.

The IFB will be headed by ex-New Scotland Yard detective John Beadle, and its �1.7m costs will be funded by a levy on insurers.

Information gathered by the IFB will be shared with police and government agencies, such as the Department for Work and Pensions.

IFB staff will analyse data from across the insurance industry, using sophisticated computer software

It will then alert insurers when it believes an organised fraud is taking place and an investigation will be launched.

Ultimately, the ABI said, the aim of the IFB was to bring gangs of fraudsters in front of the courts.

The public will be encouraged to shop fraudsters by phoning the IFB cheatline on 0800 328 2550.