Norwich Union fined for slack securityInsurance firm Norwich Union has been fined £1.26m by the Financial Services Authority after customers lost £3.3m through identity fraud.
Slack security checks at its call centre let fraudsters impersonate customers and cash in their policies.
The FSA said the company had failed to deal with the issue properly even when it had been alerted to the problem.
The fraudsters tried to steal money from 632 policies during 2006 and succeeded in 74 cases.
The money has now been repaid by the company and the policies reinstated.
Mark Hodges, chief executive of Norwich Union Life, said: "We are sorry that this situation arose and apologised to the affected customers when this happened."
"We have extensive procedures in place to protect our customers but in this instance weaknesses were exploited and we were the target of organised fraud," he said. Eleven people have been arrested by the police in connection with the crime.