The insurance industry is set to get a new independent body to tackle the fraud which costs some £1.5 billion a year.

The Association of British Insurers (ABI) says the new Insurance Fraud Bureau (IFB) will work with the police and government to find and fight fraud in the industry.

The focus of the IFB will be organised fraud, where false claims are often linked to other criminal activities from drug dealing to gun-running.

The British Insurance Brokers' Association (BIBA) has welcomed the creation of the new bureau saying reducing the amount of fraud can help to keep costs lower for insurers and customers.

"Things like 'inflated' claims add to the overall cost of claims so everyone has to eventually pay for higher premiums," said Eric Galbraith, Chief Executive, British Insurance Brokers' Association (BIBA)

"Certainly the brokers are going to be involved in this. They have to be aware of the issue and perhaps be able to spot claims that are not quite right before it goes to the insurers.

"I think the industry and the consumers will benefit from the ABI's initiative in the long-term."

Find the latest home insurance offers from UK Net Guide!