Car Insurance Fraud - June 2009

This regularly updated section of the HomeApproved web site will cover the latest trends, research, opinion and developments in the UK car insurance sector.

Car Insurance Fraud
Fraudulent and dishonest car insurance claims are a major problem for the insurance industry and fraud is alleged in a number of the cases we see. These can be difficult to assess.

To establish that fraud has taken place, some concrete evidence of lies, inconsistent statements or acts of deception must be present. The essential components of fraud are intent to deceive and desire to induce the firm to pay more than it otherwise would.

Motor Insurance fraud does not usually involve injuring people, however, a disturbing new type of car insurance fraud entitled "Crash for Cash" has emerged in recent years effectively putting motorists lives at risk and causing serious injury.

Crash for Cash
Quite simply, a fraudster will target a busy road junction by driving extremely erratically and, for example, they may perform emergency stops which are completely unnecessary, causing unsuspecting motorists to crash into them. Subsequent car insurance claims citing fictitious personal injuries are then made to the victim’s insurers.

Criminal gangs across the UK are deliberately staging accidents to make false insurance claims. More than 22,000 staged, false accidents happen every year, £200m worth of insurance payout's.

To maximize their payout, fraudsters will go as far as exaggerating damage to the vehicle, inventing injuries, passengers or even the entire accident. The scam works on the premise that insurance companies almost always pay out for rear-end accidents with very few questions. Meanwhile the driver who's also being scammed ends up paying too in their premium.

The Insurance Fraud Bureau is now fighting back. They offer advice on how to deal with the scam and they have a new database picking out people making multiple claims. Recently a gang of thirteen men were convicted for a total of 10 years - one of the first cases of its kind in the UK.

According to the Insurance Fraud Bureau (IFB) who are leading the fight against this phenomenon, the top 20 hotspots in the UK where this type of fraud occurs most often are as follows:

Bradford, Blackburn, Oldham, Liverpool, Huddersfield, Birmingham, Bolton, Halifax, Uxbridge, Luton, Ilford and Barking, Slough, London East, Harrow, Manchester, Walsall, London North, Leeds, Enfield and London North-West.

ENDS

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