Fraudulent insurance claims cost insurers over £4 million every day, the Association of British Insurers (ABI) has announced.
One in ten adults confessed to having made false claims on a general insurance policy such as home or motor insurance in the ABI's latest survey.
Around half of those claims were made under home contents or buildings insurance cover.
Honest customers are losing out as the rate of fraudulent insurance claims rises, the ABI warned, with the average annual premium raised by £40 as insurers struggle to make up the shortfall in income.
"Honest customers should not have pay for the cheats," commented Nick Starling, the ABI's director of general insurance.
Although the association itself is investing "greater resources to weeding out the cheats", police must be given stronger prosecution powers against fraudsters, he said.
Many people commit only minor insurance infringements such as exaggerating the value of a claim after a genuine car accident, claimed uSwitch.com.
But whether fraudsters are of the "if I can get away with it" school or the premeditated type, UK fraud levels are now "shockingly high", Chris Hannant, head of financial crime prevention at the ABI, told BBC Radio 4's Today programme.
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