Car insurance fraud: don’t be a victim

by Tamsin McCahill on 25.03.08

As the car pulled up to the roundabout, the road ahead was clear. “It was a sunny day and visibility was excellent. I couldn’t see any reason for him not to just drive straight onto the roundabout,” said 34-year-old Ben Jones. “But out of nowhere, he slammed on the brakes as I drove up behind him.” Ben was about to become an unwitting victim of car insurance fraud.

Inevitably, Ben crashed into the back of the car in front. “We both got out of the car to assess the damage, which to me looked like nothing more than a dented bumper. The driver of the other car insisted I give him £200 to settle the matter there and then as it was ‘clearly my fault’.

“When I refused, saying I preferred to let our insurance companies sort things out, he gave me his name and address, which he’d already written down on a piece of paper. He didn’t seem shaken at all, either, like you would when you’ve just had an accident. It struck me as odd.”

A month later, Ben got a letter from his insurance company. “They had received a claim for more than £16,000 which included the price of calling out a tow truck, and whiplash injuries to two passengers. But there really wasn’t that amount of damage and I’m sure I didn’t see anyone else in the car.”

Although Ben had no proof, he was suspicious enough to mention it to his car insurance company, who told him he may have become the victim of an increasingly common crime.

Crashing in

Figures from More Than parent company Royal & SunAlliance show that there have been over 22,500 instances of car insurance fraud since 1999. Yet this so-called ‘cash for crash’ crime wave is something of which 41% of British drivers aren’t even aware, according to a YouGov survey quoted on the BBC.

But while you may never have heard of it, your car insurance company certainly has. Fraudulent and inflated claims are estimated to cost the industry over £1.5 billion a year, adding 5% to the premiums of honest policy holders. In fact, levels of insurance crime have increased to such worrying levels that insurers have created their own Insurance Fraud Bureau (IFB) in an attempt to counter the problem.

Deliberate accidents are also a crime that the City of London Police know only too well. The force is currently investigating four suspected car insurance fraud cases, each involving more than 70 car accidents. Detective Chief Superintendant Steve Wilmott says that criminals “will drive with two or three people in their vehicle and will select a fairly new [target] vehicle with one or two people or maybe a family inside. Then they will deliberately collide with it, either by side-swiping it or by braking hard in front of the vehicle, and claim against insurance for whiplash or other injuries.”

The practice isn’t just fraudulent. “Staged motor accidents are also potentially extremely dangerous,” says ex-Metropolitan Police Detective Superintendent John Beadle, now IFB chairman. “Not only do they cost honest drivers millions of pounds each year but they also put innocent motorists in danger.”

He believes there are some telltale signs that show when you may have been involved in a fraudulent collision. “Motorists should pay extra attention to people braking suddenly in front of them for no reason, or otherwise driving erratically.” Other warning signs include the car you crashed into following you before the accident, fictitious passengers, and bogus witnesses, mechanics or doctors used to back up the claim.

Method actors

Car insurance fraud, also known as ‘auto fraud‘, is believed to originate in the US where methods have become increasingly sophisticated, often involving more than one participant. There, organised crime rings are said to be behind a large number of the incidents.

Where the US leads, the UK often follows, but you can keep one step ahead of the criminals by looking out for the following three techniques that are currently being used in the States.

1. The ’swoop and squat’
This is a sophisticated version of a classic rear-end collision that is harder to detect than when a car just slams on their brakes in front of you. The scam involves three cars – yours plus two driven by fraudsters. First, the ’swoop’ car intentionally pulls ahead of the ’squat’ vehicle and cuts it off, causing the driver of the squat car to slam on his brakes. Following behind the two, you may well be unable to react in time, meaning you’ll drive straight into the back of the squat car.

Of course the swoop vehicle has plenty of time to drive off before you’ve even had a chance to take a look at their number plate. If you’re not aware of this technique, you’ll probably innocently tell the police that the swoop vehicle caused the accident. But because this car is never to be seen again, it’ll be your car insurance company that has to pay out. Bye bye, no-claims bonus!

2. The panic stop
The fraudster crams a car (normally an old banger) with as many passengers as possible, then drives around looking for a suitable target. When the victim has been found, the fraudsters drive in front of them while one passenger keeps watch out of the back window. The passenger studies the victim, looking for any signs of distraction, such as fiddling with the stereo, or otherwise taking their eyes off the road for a second. As soon as that happens, the passenger signals to the driver who slams on the brakes, causing an accident.

3. The ‘helpful’ driver
This scheme happens when you’re trying to merge into another lane of traffic. The fraudster will motion you to come in, then speed up so you collide with them, later denying all knowledge of their earlier signalling.

Evasive action

So what can you do to avoid being taken for a ride? One of the best ways is to keep an eye on how you’re driving. Maintaining a good distance between you and the car in front isn’t just safe driving; it should also minimise your chances of falling victim to a scam. Other good tips include:

• Getting a good look at the driver and any passengers
• Taking photos of any damage – not just to your car – with your mobile phone or digital camera
• Calling the police if someone claims to be injured
• Being wary of anyone who seems too quick to offer their services as a witness – they could be in on the scam.
• Calling the confidential IFB cheatline on 0800 328 2550.

Posted by Tamsin on 25 March 08

IMAGES by Flickr users frischmilch, Dr Keats and paper or plastic?