Car insurance fraud: the latest tricks used by criminal gangs and opportunist drivers
If you have filled out a car insurance application and have been tempted to economise on the truth, you won’t be alone. Defrauding motor insurers is the most popular insurance fraud, making up six in 10 cases (59 per cent) according to the Association of British Insurers (ABI). Those doing it range from organised gangs, ripping off insurers on an industrial scale, to regular drivers opportunistically inflating claims.
At the organised crime end of the spectrum, insurer Allianz is reporting a 60-fold increase in “crash for cash” scams involving motorbikes (see below). Meanwhile police say drivers exaggerating claims have gone up by a quarter in the past year and now represent 71 per cent of motor insurance fraud. Aviva reports application fraud up by 64 per cent since last year.
But insurers aren’t the only ones suffering: crooks are using motor insurance to rip off ordinary drivers, too.
Claims for accidents that haven’t happened
Insurers say criminals are turning to technology to create “evidence” to legitimise claims for fake incidents. Fraud and investigation manager from insurer Zurich, Scott Clayton, said: “It’s become an arms race. The output created by AI (Artificial Intelligence) is so convincing we now need to use AI to decode it.
“Motor insurance is seeing very sophisticated frauds. People are changing number plates on pictures of damaged cars then submitting these with fabricated repair reports and invoices. To an experienced claims handler, it looks like the perfect chain of evidence. But it’s all fake.”
Like other insurers, Zurich is investing hundreds of thousands of pounds in technology to foil the fakers.
Ad spoofing is the latest trick fraudsters use
The internet has made so many things in life easier and is responsible for new forms of crime such as ad spoofing. If you’ve never heard of it, don’t feel out of touch: the Insurance Fraud Bureau (IFB) told us its research shows that only 18 per cent of people know about this scam.
The criminals create an advert on internet search engines that masquerades as being from a legitimate insurer. Drivers making a claim click on the ad which takes them to the criminal’s website, where they’re signed up to a claims or accident management company.
The bogus company will then try to claim against the supposed at-fault insurer. If that insurer rejects the inflated claim, the crooks charge the car owner for repair, credit hire and admin fees; costs to innocent drivers often run into tens of thousands of pounds. Adding insult to injury, the car owner’s legitimate insurer can’t help because it knows nothing about the claim.
The ABI revealed that one crook used this technique to put in 60 false claims worth £26,000 to insurers.
Ghost brokers sell cover on social media
Criminals are targeting younger, less-experienced drivers using ads on Instagram, Snapchat and TikTok. They’ll be advertising insurance as a trustworthy insurer or broker but of course they will be unregulated, sell drivers cover they don’t need, or levy admin charges they shouldn’t have to pay.
Ghost brokers take out policies using stolen personal information from drivers who are cheaper to insure. They then sell that policy to their unsuspecting victim. Although the victim thinks they’re fully covered, often through a premium that’s invitingly cheap, if they have to claim they frequently find their policy is invalid.
The ABI helped catch one ghost broker who stood to earn £50,000 by selling fake policies. In another case, a ghost broker was jailed for setting up 59 fake policies that enabled a drugs gang to evade police automatic number plate recognition (ANPR) cameras.
The IFB said: “In any given year we can uncover up to around 50,000 suspected fraudulent motor insurance applications and thousands of these could be linked to ghost broking activity.”
Crash for cash is evolving
Crash for cash is when a criminal induces an accident with an unwitting car driver but makes it look as if the innocent party was at fault, so they can claim off their insurance.
Crooks have now moved onto using motorbikes. Matt Crabtree, Allianz’s head of financial crime intelligence and investigation strategy, said: “Most members of the public wonder why you would put yourself at risk like that.
“We’ve seen footage of an accident where someone who’s reversing out of a drive crashes into a moped. It appears genuine but viewed from another camera angle you see the bike parked up the road behind a van, waiting for the right moment. You then see the rider jump off on impact but of course they’ll exaggerate their injuries from the ‘accident’.”
Allianz saw a 60-fold increase in the number of motorbike “crash for cash” claims in 2023. Most incidents occur in Greater London and mid-week, around the school run when people are preoccupied, the insurer says.
Application and opportunist fraud is on the increase
Although organised crime plays a significant role in insurance fraud, opportunist fraud – in which ordinary drivers inflate claims after incidents – accounts for most cases.
“A few years ago, they used to say Britons had the weakest necks in Europe because of the number of whiplash claims,” Zurich’s Scott Clayton said. “Since the Government clamped down on those claims, we now seem to have the weakest heads, shoulders, knees and toes. Judging by the kind of personal injury claims we get, anything but necks get injured now.”
The cost of premiums – Compare the Market says the typical insurance premium is now £850 per year – is also forcing usually law-abiding drivers into lying to cut their costs. Iain Hamilton, head of personal motor for
Aviva, said: “We can see the cost of living squeeze is creating the need for people to reduce their premiums.
“We’re seeing a range of lies. At one end, they’ll say the vehicle is kept in a garage when perhaps it’s only garaged one or two days a week. At the other, they’ll misrepresent where the vehicle is kept altogether, saying it’s kept somewhere where it’s at much less risk.”
Aviva now employs a team of 50 who look into application fraud. “We have eyes on people who’re being economical with the truth,” Hamilton said.
The problems it can lead to
For “ordinary” drivers, lying to an insurer might save a few quid but it’s storing up problems for the long term. If an insurer finds out, it might terminate the policy meaning there will be an embarrassing admission to make to a potential next insurer. And those future insurers might only provide cover with a king’s ransom of a premium.
But perhaps the worst part is that drivers who lie to get cheaper cover can be deemed as driving without insurance – a serious criminal offence and one that can catch up with them if they have to claim. “The consequences include getting a criminal record and a massive financial headache if found to be at fault for a crash,” Mark Allen, the ABI’s fraud and financial crime manager said.