Insurance fraudsters are increasingly using motor trade road risks policies to ensure their vehicles appear on the Motor Insurance Database (MID) while avoiding paying the appropriate premium for their risk. The warning comes from DNA Insurance Services (DNA), the niche motor broker, which has seen a significant increase in false policy applications over the past six months.
Alf Costa, a director of DNA said: We have noticed an emerging trend where unscrupulous characters are looking to take out motor trade road risks policies to avoid paying the correct premium for their correct risk profile. The frequency has certainly also increased in-line with escalating car insurance rates.”
To counter the problem DNA has implemented new internal procedures that verify whether clients looking to purchase a road risks policy are actually bonafide traders. To secure cover they now need to provide proof of their trading activity and identity.
Mr Costa continued: “The impact of this worrying trend is two-fold. Firstly it can render the driver’s insurance policy null and void leading to the full range of issues created by a lack of cover when a claim arises. Secondly, it can have a serious negative effect on the profitability of a brokers’ book of business and the overall account of the supporting insurer.
“While all brokers need to pro-actively vet their own clients for potential issues, this is yet another form of motor insurance fraud that can only be addressed through the vigilance of the market as a whole.”
