An insurance fraud police unit is to be set-up, paid for through a police-private sector partnership.
Funded by the insurance industry and supported by the National Fraud Authority, the unit will be operated by the City of London Police's Economic Crime Directorate.
It will focus solely on tackling insurance fraud, currently valued at £2 billion per year.
The unit, to go live on 1st January 2012, will consist of 35 specialist fraud detectives and police support staff.
The new unit will also work with the insurance industry on its continued campaign to prevent insurance fraud and recover the proceeds of crime.
The Association of British Insurers (ABI) is to pay £8.7m over the next three year to fully fund the unit, this is to be subject to evaluation after two years.
Adrian Leppard, commissioner of the City of London Police, commented: "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 key focus of the unit will be enforcement and prevention strategies, to be achieved through collaboration with the City of London Police's National Fraud Intelligence Bureau (NFIB) and the industry funded Insurance Fraud Bureau (IFB).
Dr Bernard Herdan, CEO of the National Fraud Authority, said: "This clearly shows the insurance industry responding positively and creatively in tackling fraud and setting an example from which I hope others can learn.
"This is a great achievement by all the parties involved - the NFA, City of London Police, ABI, IFB and the individual insurance companies who have participated. I am confident the unit will make a significant impact on insurance fraud benefiting the industry and its customers."
Confirmation of the unit came days after the ABI revealed it was setting up an Insurance Fraud Register to maintain details of known insurance fraudsters and identify anyone who fails to declare a previous fraudulent claim.