Insurers warn over ‘cash-for-crash’ fraud

Major companies say they are improving detection to weed out more fake personal injury claims

AN END to “crash-for-cash” claims may be on the horizon after insurers warned they were declining far more claims for suspected fraud.

One major insurer detected bogus claims of nearly a quarter of a million pounds on each day last year.

Aviva said it had declined 9.5 per cent more fraudulent claims in 2016 than the previous year, due to increases in fraud detection across motor injury, household and liability claims.

Whiplash fraud continues to make up the majority of bogus claims, with bodily injury cases accounting for 59 per cent of the total fraud Aviva detects. The insurer said it is currently investigating more than 16,000 suspect bodily injury claims.

Large insurance companies detected more than £85 million of fraudulent claims last year, the research suggests, equating to around £232,000 of bogus claims every day.

Organised fraud accounts for much of the new injury fraud detected, while Aviva found the majority of fraud is now from third parties who are not its customers.

Last year, it declined claims worth more than £25million linked to fraud rings.

There is a growing trend of bogus household claims from “serial claimants”, who make multiple claims, often for the same item, by buying multiple home insurance policies using different aliases.

The most common fraudulent household claims were for accidental damage, theft or accidental loss.

The average value of a fraudulent household claim was £1,315, with values ranging from £25 up to £83,560.

Experts suggested that a large number of relatively low value claims indicates that fraudsters believe insurers will not scrutinise low-value fraud.

Liability claims, made against an employers’ liability or public liability policy, is also a source for fraud attempts. Aviva has more than 1,000 suspect liability claims under investigation.

Tom Gardiner, head of fraud at Aviva, said: “We vigorously defend our customers against fraudulent claims, even where it is not economic to do so, and will prosecute those people making fraudulent claims wherever possible. Looking at our bodily injury fraud data, it is clear that there continues to be an urgent need for fundamental reform of how minor personal injuries are compensated.”

Ben Fletcher, director of the Insurance Fraud Bureau, said: “Insurance fraud is often regarded as a victimless crime but the reality is that it impacts the honest policyholder who ends up footing the bill. Coordinated motor insurance fraud scams, such as ‘crash for cash’ fraud, can potentially run into millions of pounds though fake personal injury and credit hire claims. Currently ‘crash for cash’ insurance fraud costs £336 million a year.”