The Government is setting up a taskforce to radically cut insurance fraud, which costs the industry billions of pounds a year and adds £50 a year to the average household bill.
Experts are expected to come up with a series of proposals to tackle claimants who believe insurance fraud is "fair game".
The most common type of fraud in the household insurance market is believed to be exaggerating the value of a claim after a burglary, by "upping" a claim for higher-value goods than were actually stolen or even making completely false claims for non-existent items.
The move comes after similar reforms of the motor insurance market - designed to combat bogus claims for whiplash injuries - led to a significant drop in premium costs, according to industry figures.
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The customer is expected to see similar benefits on other types of policies if the new taskforce is a success.
Mr Grayling said: "The Government has taken big steps towards reducing bogus whiplash claims but the problem needs to be addressed more widely beyond motor insurance.
"And I believe there is scope to consider a broader number of issues which contribute to claims fraud more widely."
He said it was important to tackle the "perception among some consumers that insurance is ‘fair game’ and that making a fraudulent claim is a legitimate way to make some money".
There were also some insurers, lawyers, claims management companies and other intermediaries which are failing to deter insurance claims fraud, he said.
The legal system may also need to be strengthened to combat claims fraud, the Justice Secretary added.
The taskforce will report back to the Ministry of Justice in March next year.
Moves to tackle whiplash claims have already seen limits placed on the cost of medical reports but Mr Grayling called on the insurance industry to "step up to the plate" and do more.
He announced further moves, which will come into force in April, which will require experts who carry out medical whiplash examinations to be accredited by the Ministry of Justice.
A new website - called MedCo - will make a "random allocation" of medical experts to each new whiplash claim, breaking the link between claims management companies and medical firms which provide evidence of the injuries.
There have been widespread concerns that some disreputable claims managers were securing illegitimate medical reports in order to make claims against insurers.
According to the Association of British Insurers (ABI), motor insurance premiums in the third quarter of this year fell by £2 to £356 over the previous quarter, and over the last 18 months the average premium has fallen by 7 per cent.
Huw Evans, of the ABI, said: "The Government’s commitment to tackle the UK’s whiplash epidemic is welcome, but more still needs to be done - including raising the small claims track limit - to tackle the issue.
"More widely, the insurance industry is committed to reducing insurance fraud to protect honest customers, and is already investing over £200 million a year in tackling the problem.
"Industry anti-fraud initiatives, such as the insurance fraud enforcement department and the insurance fraud bureau, are at the forefront of the crackdown on insurance cheats.
"If the taskforce is to be effective it needs to tackle claims management companies, which are driving the high volume of exaggerated and fraudulent claims.”
The ABI detected 118,500 bogus or exaggerated insurance claims last year, equal to 2,279 a week, worth £1.3 billion, up 18 per cent on 2012.
An average fraud, across all types of insurance products, netted nearly £11,000 for the criminal.
The scale of undetected fraud is thought to run into billions.
Mr Grayling said: "The Government has taken big steps towards reducing bogus whiplash claims but the problem needs to be addressed more widely beyond motor insurance.
"And I believe there is scope to consider a broader number of issues which contribute to claims fraud more widely."
He said it was important to tackle the "perception among some consumers that insurance is ‘fair game’ and that making a fraudulent claim is a legitimate way to make some money".
There were also some insurers, lawyers, claims management companies and other intermediaries which are failing to deter insurance claims fraud, he said.
The legal system may also need to be strengthened to combat claims fraud, the Justice Secretary added.
The taskforce will report back to the Ministry of Justice in March next year.
Moves to tackle whiplash claims have already seen limits placed on the cost of medical reports but Mr Grayling called on the insurance industry to "step up to the plate" and do more.
He announced further moves, which will come into force in April, which will require experts who carry out medical whiplash examinations to be accredited by the Ministry of Justice.
A new website - called MedCo - will make a "random allocation" of medical experts to each new whiplash claim, breaking the link between claims management companies and medical firms which provide evidence of the injuries.
There have been widespread concerns that some disreputable claims managers were securing illegitimate medical reports in order to make claims against insurers.
According to the Association of British Insurers (ABI), motor insurance premiums in the third quarter of this year fell by £2 to £356 over the previous quarter, and over the last 18 months the average premium has fallen by 7 per cent.
Huw Evans, of the ABI, said: "The Government’s commitment to tackle the UK’s whiplash epidemic is welcome, but more still needs to be done - including raising the small claims track limit - to tackle the issue.
"More widely, the insurance industry is committed to reducing insurance fraud to protect honest customers, and is already investing over £200 million a year in tackling the problem.
"Industry anti-fraud initiatives, such as the insurance fraud enforcement department and the insurance fraud bureau, are at the forefront of the crackdown on insurance cheats.
"If the taskforce is to be effective it needs to tackle claims management companies, which are driving the high volume of exaggerated and fraudulent claims.”
The ABI detected 118,500 bogus or exaggerated insurance claims last year, equal to 2,279 a week, worth £1.3 billion, up 18 per cent on 2012.
An average fraud, across all types of insurance products, netted nearly £11,000 for the criminal.
The scale of undetected fraud is thought to run into billions.
