My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest: I am chairman of an insurance organisation and a former director of the British Insurance Brokers Association.

The Question was as follows:

To ask Her Majesty’s Government what support they are giving to the police and the insurance industry to tackle the increasing occurrence of insurance fraud.

My Lords, the recent cross-Whitehall fraud review led to the allocation of £29 million in new money over the next three years to establish the National Fraud Strategic Authority, a National Fraud Reporting Centre and a national lead force for fraud investigation. These developments will help provide support to the police and the insurance industry in their efforts to tackle insurance fraud.

My Lords, I thank the Minister for that reply. The NFSA does not have statutory authority. Would it be possible for it to have statutory powers?

My Lords, I will have to get back to the noble Lord in writing on the specifics of that. As he well knows—his interest in this area is well known and he has done some very useful work here—the whole aim of the authority is to drive forward a strategy; to assess the scale of the problem, and we appreciate that it is a huge problem; to set priority areas; and to work with stakeholders. It is an important unit. I mentioned the other three main areas where work is going on, and we should be able to establish two of them shortly.

My Lords, does the Minister agree that cash-for-crash scams—staged accidents—are on the increase, and that they are dangerous to the public and to the insurance companies? Does he believe that the new arrangements he has just announced can deal with this issue, particularly when criminal activity seems to be part of it?

My Lords, the noble Baroness raises a very important point. In these sorts of accidents people will, for example, fix their brake lights so that they do not actually show and then slam on their brakes in front of someone who runs into them, and then claim for fictitious passengers. The assessed cost of this over the past year is about £250 million. The measures we have put in place are tackling this. I also congratulate the insurance companies themselves; organisations such as the Insurance Fraud Bureau have had huge success. The fact that we have seen a slight reduction rather than an increase shows that the measures are working.

My Lords, perhaps I may follow up on that question. When a question on cash-for-crash was asked in another place last month, the Minister there said that it was a matter of concern that had to be monitored closely. In view of the scale of the problem, does the noble Lord agree that it is not just a question of monitoring, but that we need action by the police and by a combination of the police and the insurance companies to make drivers aware that these kinds of scams are increasingly common?

My Lords, the noble Lord is absolutely right. With the setting up of the National Fraud Reporting Centre—a powerful intelligence tool—what has been done by the industry itself and the fact that this sort of crime is now on the SOCA UK threat assessment, there is greater understanding of it. We are getting that message across, and I hope that that will make people more aware. The impact of some of the prosecutions taking place has been a reduction in the levels of this crime.

My Lords, I welcome my noble friend’s explanation of progress since the fraud review, while declaring an interest as a Minister involved in it. I suggest to him that, in answer to the noble Lord, Lord Sheikh, the strategic fraud authority will not need its own statutory powers because it is setting strategy, whereas implementing bodies such as the police and the prosecuting authorities have ample statutory power to implement it.

My Lords, my noble friend is absolutely right. That is why the Fraud Act, which came into force last year, was widely welcomed by the industry. However, I fear that I will still have to answer the noble Lord, Lord Sheikh, in writing as there may be other points to address.

My Lords, can the Minister tell the House why the Government believe that there is an increasing occurrence of insurance fraud?

My Lords, as I said a moment ago, we are now getting to grips with this. We have established that SOCA is looking at it in great detail. We have the reporting centre and the lead force—the City of London force—established, which is able to draw on all the expertise in this area, and the National Fraud Strategic Authority, as mentioned. We are seeing a reduction.

I am not saying that the Government do not take this seriously. Overall, fraud costs this nation about £13.9 billion a year across the whole gamut; it is absolutely appalling. I found it interesting when I lost some stuff and talked to the assessors. They said, “We might give you a bit more because you seem honest”, as if to say that an awful lot of the people do not seem honest. I was rather shocked by this. We take fraud seriously, and are doing a lot to confront it.

My Lords, to follow on from the noble Lord’s answer, does not the extra cost incurred by fraud fall on each and every one of us, in that we must pay higher insurance premiums? A lot of fraud is minor, about which people will sometimes boast. Is it not incumbent on each of us to say that we do not approve?

My Lords, I could not agree more. There is a feeling among some people that this somehow does not affect us—“Lucky old them for getting away with it”. It is criminal and should be addressed as such. We all pay; it adds between 5 and 8 per cent to all of our insurance policies.

My Lords, to what extent is the problem made worse by the activities of no-win no-fee lawyers and the intense advertising encouraging people to make claims which, if not fraudulent, are, shall we say, a little iffy?

My Lords, I have my own views about these. However, it is possibly not a good idea for me to express them on the Floor of the House; I am bound to get into trouble.