Dishonest motor insurance claims totalled £410 million last year, according to figures released by the Association of British Insurers (ABI).
The ABI found that during 2009, insurers exposed more than 2300 bogus claims in all types of insurance every week. Four per cent of all claims by cost were fraudulent.
Nick Starling, the ABI's Director of General Insurance and Health, said: "Reducing fraud remains an ongoing battle for the insurance industry. Our honest customers rightly object to having to pay higher premiums to subsidise the fraudulent minority."
The news follows AA British Insurance Premium Index figures which state that the cost of car insurance has grown at its fastest ever recorded rate in the last quarter, in large part due to a rise in fraudulent claims.
During the three months to the end of June, car insurance premiums went up by 11.5 per cent to £704 for an average annual comprehensive car policy.
This is the biggest increase recorded by the motoring organisation since it started tracking quarterly insurance premium trends 16 years ago.