Bogus Claims push up Insurance Premiums
Figures reveal 18% rise in fraud
Figures have revealed an 18% rise in false claims and staged crashes which push up insurance premiums. Tens of thousands of fraudulent ‘crash for cash’ claims are adding £90 to every driver’s insurance policy. The increase in staged crashes and false whiplash claims helped fuel the 18% rise in insurance fraud last year that cost a record £1.3billion. Nearly two thirds of this was paid out to motoring claimants with the equivalent of one hundred and sixty four crash scams being exposed every day.
Insurance chiefs blame the increase on an epidemic of bogus whiplash claims as well as organised gangs operating ‘crash for cash’ schemes on an industrial scale. They warn the true figures could be much higher because the figures only relate to detected levels of insurance fraud. ‘Crash for cash’ accidents involve fraudsters deliberately crashing and then submitting bogus personal injury claims. The ‘slam on’ scam is common, where a driver brakes suddenly at a roundabout or junction, causing the innocent driver behind to crash into the vehicle. Not only is this frightening for the unaware driver it is dangerous, Baljinder Gill, 34, died in 2011 when three men tried to crash into a van in front of her car on the A40 in Buckinghamshire. Miss Gill’s Ford Fiesta rammed into the van and she was hit by another vehicle when she got out of her car.
The scams get worse only last week a bus company axed a busy route in Birmingham due to repeated fraud. In fact Central Buses received fifteen claims in one instance from people saying they were hurt in an accident which had only involved four passengers. Whiplash is the most common cause for claim, it is difficult to diagnose whiplash objectively and this has deterred insurers from defending claims in court. Whiplash claims alone now cost the industry more than £2.2billion a year accounting for eight out of ten personal injury claims after an accident. Britain has been branded ‘the whiplash capital of Europe’ by insurance experts and MPs.
An Association of British Insurers report reveals a total of 118,500 bogus or exaggerated insurance claims were detected last year and almost half were for motoring claims. Exaggerated claims are submitted by motorists who have genuinely been involved in an accident but have been encouraged to submit inflated claims by lawyers whose hefty bills make the insurance industry’s costs even higher. The report concludes ‘Fraudulent motor insurance claims were the most expensive and common, with the number of dishonest claims at 59,900 up 34 per cent on 2012 and their value at £811million, up 32 per cent’.