We've all been there, finding a car we like only to discover that the insurance companies want an arm and a leg to allow us to drive it. In theory your premium should come down each year as no claims and experience build up. But in fact premiums have been climbing, and there must be some reason behind this. Well Matthew Crist has been taking a look, and may well have the answer...
For anyone who feels insurance premiums are going through the roof – they may have a point.
But is this just down to greedy companies looking to make a quick buck off the back of a legal requirement, or is it due to the fact that fraudulent insurance claims are actually costing the industry a small fortune each year?
Well new figures might just suggest it’s more than likely the latter.
According to the Association of British Insurers (ABI), fake car crashes helped to push the level of insurance fraud to a record £1.3bn in 2013. That’s an increase of 18% on the previous year.
With the number of dishonest motor claims rising by 34% to 59,900 people attempting to cheat the industry out of £811m, ‘crash for cash’ claims have now become the most costly form of insurance fraud going in the UK.
But it’s not just insurance firms who are having to fork out. The process ultimately costs the average household around £50 a year.
As the name suggests, ‘crash for cash’ cases are when fraudsters stage an accident in order to make a fraudulent insurance claim.
Drivers slam their brakes on at a road junction so that the car behind crashes into them, with some even disabling the brake lights in order to make their actions less predictable for those following behind.
And so that all bases are covered, the fraudsters will even make sure they have witnesses on hand to prove that the crash was the other driver's fault – so that the scammers can also make an insurance claim for the damage, as well as whiplash injuries sustained.
Some criminals have been known to have a network of car repair shops, car hire organisations, even doctors and motoring solicitors, who are in on the fraud to make claims as realistic as possible.
In one such case in County Durham last year, 60 people were convicted for one of the UK's largest ‘crash for cash’ frauds, where as many as 25 accidents were staged in the Consett area – resulting in local residents having to pay an extra £100 on their premiums.
And in a separate incident a “crash for cash” gang targeting an innocent victim by creating a motorway accident has even been caught on tape.
The shock scenes were taken from the victim’s car and used in court to help convict the criminals.
Click here to take a look.
According to top insurance firm Aviva, motor injury fraud now accounts for 54% of their total detected claims fraud costs. And more than half are from organised so-called “cash for crash” claims.
While figures published earlier this year by LV=, showed that around 300,000 accidents have been deliberately staged in the past five years as criminals look to profit from an insurance swindle.
Tom Gardiner, head of fraud at Aviva, has said: “We are witnessing a trend towards third party, injury and organised fraud. For example, in 2013, we identified fraud in one in nine of third party injury claims.”
But this type of fraud may not be a new thing and greater awareness might actually be behind the steep rise.
The ABI says: “The recorded level of insurance fraud is increasing because more people are reporting it and more resources are being used to fight it.”
As well as this, The Insurance Fraud Enforcement Department, a specialist police unit set-up especially for such cases, has helped to prosecute 85 people since it was established in 2011.
The Insurance Fraud Bureau (IFB), which was set up in 2006 to specifically tackle false motor policy claims, is also currently investigating 110 "crash for cash" schemes across the country.
So what can you do to ensure you are not the next target of this scam?
Well put simply, not a lot.
Apart from following all the good advice you were given by your driving instructor – keep your distance from the car in front, drive safely and pay attention at all times and always anticipate the road and any potential hazards that might be ahead.
Remember. The better and safer you drive, the less excuse you give the fraudsters to target you.
About the author:
Matthew Crist is a journalist, author and blogger. Matthew has written for a number of top publications including Time Out and the BBC. He also contributes articles to a number of websites and blogs on motoring and legal issues. You can follow him on Twitter @MatthewCrist76.