The Cost of Insurance Fraud

By David John Martin

Their scams had amassed £8 million and involved hundreds of possibly staged crashes, now 25 arrests have been made in Manchester following a three-year investigation into a gang of insurance fraudsters. So is the face of insurance fraud changing? And how much does it cost us?

The methods used have become known as 'crash for cash' scams. By disconnecting the break-lights on their own cars, the fraudsters would drive around as normal until they approached a roundabout or junction where they would break suddenly causing the driver behind to smash into the back of them.

After calmly acquiring each other's insurance details, the thieves, according to The Mirror 'would submit hugely-inflated insurance claims,' even to the point of faking injuries such as whiplash and including additional car damage that hadn't seemingly happened during the collision.

Similar scams have been carried out by fraudsters and are perhaps best well known in the US. So-called 'swoop and squat' scams involve a third car that cuts of the criminal positioned in front of the victim who rarely manages to stop in time. There is also the Panic Stop where a criminal passenger sitting in the rear of a car of scammers keeps an eye on the victim behind until he/she turns on the radio or checks their mobile phone, this is the moment that the fraudsters stop suddenly.

The Manchester Evening Standard reports that Greater Manchester police estimate that the amount made by each 'crash for cash' scams averaged £20,000. Countrywide, this type of insurance fraud is costing the industry £1.6 billion a year which adds an average £40 to each premium. Richard Davies, from the Insurance Fraud Bureau warns that 'this problem is nationwide and it is growing'.

Clearly however, the problem goes far beyond the added expense it adds to car insurance premiums which everyone pays for, there is also a safety issue that should be considered, as luring cars to smash into your own is surely a dangerous business for everyone involved.

However, we all need car insurance and with so many policies and prices to choose from on the web, finding cheap car insurance is easier now than ever.