“Crash for cash” scammers earn an average of £16,000 per “accident”, according to the body set up to combat this type of fraud.
Richard Davies, deputy chairman of The Insurance Fraud Bureau (IFB), estimates that the fraudulent “crash for cash” claims submitted amount to £350 million a year.
He said: “Crash for cash is an exceedingly common problem. Back in 2006 it was worth around £200 million a year.
“You can make serious money from this. You can make an average of £16,000 per accident on this scam.”
Mr Davies said that typically, the staged accident involved a low speed collision and the “victim” who has been shunted claims for personal injury, vehicle damage and replacement vehicle hire.
He said: “The crash may have involved a car with just one person in but by the time the claim is put in the number of passengers jumps.”
Claimants often use the services of an accident management company (AMC).
Mr Davies said that some AMCs provide a complete service to the claimant, from arranging their car hire – the cost of which often exceeds the value of their own car – to coaching them in what to say to a doctor.
He said: “We often find that the car hire company is related in some way to the accident management company. There’s a gap that needs to be examined.”
Mr Davies said that insurance fraud costs consumers around £44 on their car insurance premiums every year. He said: “Crash for cash was first seen in the North West in 2001-02. It’s still the case that the North West of England is a hotspot. Since then it’s spread across the country.”
The top 10 hotspots for crash for cash fraud include Bradford in first place and Luton in last place. Blackburn, Oldham and Bolton are all in the top 10.
Mr Davies said: “It’s a pretty big problem, it’s the reason why the bureau was set up.”
The IFB has a database containing 250 million records which help them to analyse claims and pinpoint fraudulent activity. It is currently involved in 28 suspected crash for cash scams across 13 police forces, according to Mr Davies.
He said: “We want to ensure members of the public understand the impact of the crash for cash.”
Steve Chelton, Insurer Development Manager, for Swinton, the UK’s leading high street retailer of car insurance, said: “These staged car crashes are on the rise and not only do they cost the industry thousands of pounds and cause premiums to rise, more they also put innocent lives at risk.
“We estimate that these cash for crash scams cost the insurance industry over £200 million a year, and it is British motorists who are feeling the consequences with skyrocketing motor insurance premiums.”
