Insurance fraud: “Crash for Cash” – 86 charged

This hearing is just one of a number of “crash for cash” scams, which are believed to be costing the insurance industry £392 million each year.

“Crash for Cash” scams

“Crash for Cash” scams either involve an induced collision or so-called “phantom passengers”.

Typical scenarios for induced collisions are:

1. Two scammers crashing into one another away from the public eye;
2. One scammer forcing an innocent driver to become the driver at fault by suddenly and deliberately braking in front of them (brake lights are sometimes removed from the scammer’s cars to ensure that the innocent driver has no warning); and
3. One scammer submits a fabricated claim where no accident has occurred at all.

So-called “phantom passenger” scams occur where a claim is made, often following a genuine accident, by someone who was not involved in the accident.

Scammers often use reports from various professionals and organisations including solicitors, doctors, mechanics and case management companies to provide the verification and documentation required to “authenticate” their insurance claim. Further, the damage suffered is often exaggerated to ensure the maximum payout possible, with payouts being as high as £30,000.

Quite apart from the financial costs to insurers (which are ultimately passed on to consumers by way of higher premiums), such scams are inherently dangerous.

Insurance fraud

Identified insurance fraud claims total over £2.7 million a year, with the Association of British Insurers estimating that undetected fraudulent claims value £2.1 billion a year, costing policyholders an extra £1 billion of premium each year. It is an ongoing battle to combat fraud in the insurance industry.

Each fraudulent claim is different but there are some common indicators to look out for, including claims where:

• there are no witness at all or the witnesses are all connected to the claimant;
• there are discrepancies in the accounts of witnesses or other evidence;
• there is a delay in reporting the incident;
• there is no record of medical treatment or there is a delay in seeking such treatment; and/or
• the claimant has a history of claims.

Insurers are doing their utmost to counter insurance fraud and are investing £200 million a year in preventative measures. Practical steps insurers can take in the battle against fraud include:

• Acting quickly to collect evidence;
• Reviewing surveillance and medical evidence;
• Documenting and recording inspection results;
• Verifying everything;
• Investigating the public records available for the claimant – electoral roll, address etc;
• Using regional contacts who have local knowledge; and
• Looking out for claims patterns.

However, the problem remains that fighting fraudulent claims can often cost more than simply paying the claims themselves. Until such time as a resolution can be found to redress this balance, insurance fraud will continue to be a hot topic for insurers.

For further information on fraudulent claims, see our previous Law Now on the Transport Select Committee’s report on fraudulent whiplash claims.