Desperate Brits are being driven to extreme measures behind the wheel because of the recession, according to moneysupermarket.com. Research from the UK’s price comparison site reveals more than a million (1,020,000) motorists would consider staging a motor accident in order to make a claim on their insurance. Worryingly 340,000 motorists admit to having already successfully done so1.
The insurance industry separates this type of motor insurance fraud into three categories:
- ‘Staged’ motor accidents; two vehicles deliberately knock into each other in order to claim on insurance.
- ‘Contrived’ motor accidents; a fabricated claim for a motor incident that never took place.
- ‘Induced’ motor accidents; a deliberate action by a motorist to force an innocent driver to crash into them, such as braking suddenly so they are hit from behind.
The research found men are twice as likely to have staged a motor accident (five per cent compared to two per cent of women). Twenty-somethings pose the most danger on the roads, with three per cent admitting to having already successfully made a fraudulent motor claim, and a further six per cent would consider it. The results also reveal Londoners as the riskiest behind the wheel – six per cent have or would consider committing motor fraud, compared to just two per cent in Northern Ireland and Wales[1].
Steve Sweeney, head of motor insurance at moneysupermarket.com said: “Desperate times do often call for desperate measures, but surely this is a step too far for British motorists. We have all been affected by the recession in one way or another, but crashing for cash is not only illegal but wilfully endangers the lives of others.”
According to the ABI fraudulent insurance claims cost the industry over £4 million every day or £1.6 billion per year – and adds nearly £40 to the average annual premium paid by honest policyholders. It estimates over 22,500 fraudulent staged and induced motor accidents took place across the country between 1999 and 2005.[2]
Steve Sweeney continued: “Our research reveals there are many more motorists causing this type of fraud and getting away with it than the industry is aware of. Organised motor fraud not only costs the insurance industry millions, but risks the safety of innocent drivers, passengers and pedestrians.
“Any motor insurance claim proved to involve an organised accident will be considered as fraudulent by an insurer, and is likely to have drastic, long-term affects on your motoring as a consequence. If found guilty, an official “fraud mark” could be added to your license; this will prompt your insurer to void existing cover and probably refuse you cover in the future[3].
“Regardless of how tempting it may seem to get your hands on some extra cash, carrying out organised motor fraud whether it is ‘staged’, ‘contrived’ or ‘induced’, it really isn’t worth the risk. After all, it could end up costing you more in the long run.”
[1] Research undertaken by Opinium Research based on an online poll of 1,509 British drivers in August 2009. Results have been weighted to nationally representative criteria. www.opiniumresearch.com.
RAC 2008 Report on Motoring: http://www.rac.co.uk/report-on-motoring/report-one/how-motoring-has-changed.htm
34 million vehicles currently on our roads: one per cent of 34 million = 340,000 / three per cent of 34 million = 1,020,000, or over one million.
[2] Association of British Insurers
http://www.abi.org.uk/Media/Releases/2007/05/Fraudulent_insurance_claims_now_top_4_million_a_day_says_the_ABI.aspx
[3] Views of insurance providers on organised motor fraud:
Esure:
- On the fraudster: If found guilty of causing a staged accident, it would be very difficult to obtain insurance through any standard underwriter in future, being convicted for both fraud and potentially endangering life. The crime would be logged by both the police and the various insurance fraud databases, and would only be insurable via a specialist underwriter.
- On the victim: If a victim of a staged accident, any insurance claim would depend on whether the guilty party is convicted and the type of insurance they have.
Swiftcover: Tina Shortle, Marketing Director for swiftcover.com
- On the fraudster: Assuming the claim was instigated against swiftcover.com by a current swiftcover.com policyholder, and Swiftcover had confirmed evidence of fraud which resulted in the repudiation of the claim in its entirety, the policyholder would have their policy voided from the date of the claim. The insured would not then be able to get another policy with swiftcover.com.
- If they declared all material facts to another insurer when applying for a new policy, as is required, then they would have difficulty obtaining another policy due to the requirement to disclose “whether you have previously been refused insurance or had a policy cancelled.”
- On the victim: If an innocent victim of motor insurance fraud, who would pay for the damages would depend on how the claim was settled. The incident would still need to be declared as a claim and, depending on how the claim was settled, it would need to be affirmed by swiftcover.com as a fault or non-fault claim. A fault claim could potentially result in a higher premium.
- Assuming that the staged accident was one that induced a victim – the swiftcover.com policyholder – to crash, such as a “slam-on”, then we have an obligation under the Road Traffic Act to settle their claim. If our policyholder was the victim of a suspected fraud we would share this information with the other party’s insurer, who may repudiate their policyholder’s claim, but would be obliged to settle the loss of the innocent victim – the swiftcover.com policyholder. In these circumstances, if the other party’s insurer settled the claim, then we would treat this as a non-fault claim so the swiftcover.com policyholder’s no claims discount would not be affected and their premium would not increase as a result of the claim.
- There may be a situation in such a claim whereby the other party’s insurer may wish to repudiate the claim in its entirety under the defence of fraud, although they would have to have established proven collusive links between the parties. In such a situation, if swiftcover.com disagreed with the evidence then we would settle our policyholder’s claim and attempt to recover the costs from other party’s insurers, which could affect our policyholder’s no claims discount and subsequently their premium.
- If the claim went to court, the courts would only allow the repudiation of relevant parts of the claim for fraud if it agreed with the evidence, and it is likely that there would be a direction to settle the innocent victim’s claim, in which case their NCD would be reinstated
