At a glance
- New Association of British Insurers figures show an average of 350 frauds worth £3.6 million were detected every day in 2014
- Dishonest motor insurance frauds were the most common, up 12% on 2013
- We discuss some of the tell-tale signs of motoring fraud
Motoring scams cost UK insurers hundreds of millions of pounds every year.
The Association of British Insurers has released figures showing there were 67,000 fraudulent motor claims in 2014, up 12% on 2013. These claims were valued at £835 million.
In total, UK insurers detected 130,000 fraudulent claims last year, equivalent to 350 every day.
The most well known motoring scam is ‘crash-for-cash’, where criminals deliberately cause accidents, either amongst themselves or by targeting innocent motorists. An example of this is where a criminal brakes ahead of an unsuspecting motorist for no reason, causing the victim to drive into the back of the criminal’s car. Crash-for-cash is estimated to cost the insurance industry £392 million a year in fraud.
Red flag indicators in motor fraud cases
- Third Party stopped for no reason or appeared to cause accident deliberately.
- Three or more adult occupants in either vehicle
- Accident occurred late at night or early in the morning 10pm-6am
- Without prompting the p/h mentions they did not see the TP break lights prior to the accident.
- Ghost occupancy or ghost passengers (parties claim for whiplash who were not in the vehicle)
- Bus crashes
- Exaggeration – Vehicle Damage/Injuries
- Third party provided a pre-written note & details to the p/h at the scene
So-called ‘flash-for-cash’ scams have been well publicised in the press. They operate along similar lines to induced accidents mentioned above, whereby criminals flash their car lights to let an innocent motorist out at a junction, before then crashing into them on purpose. This is the latest variation on a constantly evolving theme that is proving tricky to disprove in court as it can come down to one person’s word against another.
Knowing what to look for
Ultimately, it is honest policyholders who pay for fraud through their insurance premiums.
“The most important thing is if something doesn’t feel or look right, then it probably isn’t,” said Kat Scott, Intelligence Team Leader at Zurich.
“In my experience I wouldn’t say that ‘flash-for-cash’ is widespread. The ones in the headlines are isolated cases. There are more common other examples, some of which we have seen a sudden rise of at Zurich.”
These scams have become lucrative moneymaking schemes for criminals, as it is hard to prove what actually occurred. It almost always comes down to the word of the innocent driver against the criminal, who is also able to extract cash from a claim in a variety of ways – for example, fake whiplash injuries, loss of earnings, ghost passengers, vehicle damage repairs and credit hire.
Induced, staged and contrived
Zurich’s Fraud Teams most commonly deal with three common types of scam – induced, staged and contrived.
“With an induced incident, the perpetrator will set out knowing that they’re going to induce a road traffic collision with an innocent victim,” said Kat.
“This might be on a roundabout, where they might slam on the brakes. It might be in unison with another vehicle, sometimes referred to as a decoy or stooge vehicle. The sudden braking will cause the vehicle behind the stooge to slam on the brakes and results in an innocent victim crashing into them. This is what ‘crash-for-cash’ or ‘flash-for-cash’ incidents commonly are.
“Secondly, in a staged accident both parties are generally complicit and typically damage will be manufactured. Two vehicles will be collided in similar circumstances to those being reported, but often the damage isn’t consistent with the story.
“And finally there’s a contrived incident, which is completely paper-based and won’t have happened at all. It may be that one or both parties are complicit and so you’ll look for indicators from both sides. Someone might see a damaged car that’s been involved in an accident, take a picture of it and then claim that that car caused damage to theirs and it’s all done through a paper trail.”
In many cases, though, there are a number of red flag indicators (see box out) that indicate an accident could be a potential fraud.
Criminals, though, are always on the lookout for the next scam. And one particular area of fraud that has been on the rise involves staged bus crashes.
“What we have seen at Zurich is people taking out a hired car with an insurance policy and inducing road accidents with a bus,” said Kat. “A typical example is where they brake suddenly in front or drive into the rear of the vehicle. Through Intelligence Research and claimant profiling, we may find links between a driver and parties on the bus, so close attention to detail is required when investigating such cases.
Advising customers to minimise motor fraud
- Report all incidents promptly to your insurer/broker.
- Write a detailed report of the incident as soon as possible while it is still fresh
- Take photos of all the vehicles involved as damage can be exaggerated
- Make a note of the registration numbers
- Note down the names, age and sex of all passengers
- If possible and safe to do so, take photos of all parties involved
- Get statements from any witnesses present
“Where possible we will obtain and review CCTV footage as part of the investigation, which can often prove crucial. Teenage ‘victims’ or young adults feigning neck pain immediately from the accident or throwing themselves off seats while other passengers won’t even have realised there has been an accident.”
Constantly evolving and adapting
Another scam that has also gained traction recently is where criminals call insurers pretending to be the policyholder, and attempt to change the address of the policy in order to submit a claim.
“It’s in the very early days at the moment and what we’re seeing is that it is often the same telephone number calling everyone up, so that’s very easy to spot and we’re investigating it, but it’s not particularly sophisticated,” said Kat.
“However, customers need to keep details safe, especially as it could generate an additional premium or something they’re not expecting.”