Funded by the members of the Association of British Insurers (ABI) and supported by the National Fraud Authority, the unit will be operated by the City of London Police’s Economic Crime Directorate.

It will provide additional operational capability, focusing solely on tackling insurance fraud, a crime valued at £2 billion per year – which adds an extra £44 a year to each premium paid by consumers.

The unit, which aims to go live on 1 January 2012, will consist of 35 specialist fraud detectives and police support staff and will provide a dedicated response to threats posed to the insurance industry by both organised gangs and opportunist fraudsters.

Adrian Leppard, commissioner of the City of London Police, said: 'A dedicated police unit funded by the insurance industry and operated by fraud detectives from the City of London Police is a major step forward in the fight against a crime that hits the pockets of everyone paying insurance premiums.

'This initiative is the culmination of months of hard work with the insurance industry, and represents another important landmark for private sector funding in policing, something that we should actively encourage within the current financial climate.'

The news follows the announcement last week of the launch of a new national Insurance Fraud Register.

Funded by ABI members, the register will be an industry-owned database enabling insurers to share information on known cheats. The database will enable insurers to identify anyone who fails to declare a previous fraudulent insurance claim and follows a six-month pilot exercise. It should be fully operational by early 2012.