When Crash for Cash fraudsters win, innocent motorist lose with increased premiums
Crash for cash accidents are big business in the UK. To put it into prospective, a crash for cash or staged accident took place every three hours in the UK in 2015, enabling fraudsters to defraud UK insurers by obtaining fake compensation payouts or costs associated with road traffic accidents.
These deliberate crash for cash accidents which can also target innocent motorists not only result in non-existent claims for injuries, but the innocent motorist is left out of pocket having to pay higher insurance premiums due to the loss of their no-claim bonus as well as forking out for their insurance excess.
A report by Aviva, has seen an 18 per cent rise in organised crash for cash scams – with 4,000 motor injury claims linked to known fraud rings. These organised gangs are behind staged or bogus accidents, and the subsequent fraudulent motor injury claims that follow, with an estimated 10 per cent of all injury claims linked to staged accidents.
The study looked at induced accidents, where fraudsters deliberately target innocent motorists to claim whiplash compensation. And Aviva has more than 17,000 suspicious whiplash claims under investigation, with 4,000 motor injury claims linked to known fraud rings. Motor fraud remains the largest type of fraud Aviva detects, representing 60 per cent of all claims fraud with a value of £58million.
The insurer examined its own claim data and found that 25 per cent of its 3,000 crash for cash claims took place in the Midlands. Of these, a quarter occurred in the West Midlands city – with the worst postcode being B11, which covers Sparkhill, Sparkbrook and Tyseley. Other ‘crash for cash’ hotspots exposed by Aviva, found Coventry, Leeds, Bradford, Oldham, Luton and parts of London.
The compensation culture that arrived in the UK from our friends over the pond has given rise to the number of solicitors and claim management companies offering to make injury claims for motorists. In a bid to quash this multi-billion pound industry and to help cut the costs of premiums, the Chancellor announced in his 2015 Autumn Statement that he would scrap the right to cash compensation for minor injury claims. Instead, victims should be offered treatment such as physiotherapy – a move that save motorists £50 a year on their premiums.
Maurice Tulloch, CEO, UK and Ireland General Insurance, Aviva said: “Last summer Aviva said that motor premiums will have ‘nowhere to go but up’ if we failed to address the excessive numbers of minor motor injury claims and the escalating costs surrounding them.
“We are here to help our customers when they need it, and pay genuine claims quickly. But we must address how to best treat the excessive number of fraudulent, exaggerated and minor whiplash claims which are driving up the cost of insurance.
“Sadly, we are now witnessing a resurgence in the number and cost of whiplash and soft-tissue injury claims despite some very positive developments, such as the LASPO Act, which helped reduce customer premiums. The introduction of a new system for sourcing medical reports in soft tissue injury claims (known as MedCo) is also a step forward.”
If you need any more evidence to show that making false injury claims by the public is far too easy, with little to no comeback Aviva in January 2016, reported £250,000 worth of bogus injury claims made by passengers of a party bus. The claims arose from a low-speed accident involving a double-decker “party bus.
Most of the 46 party-goers on route to a local nightclub were unaware of the collision at the time, which occurred in September 2012 at a roundabout in Crewe. Aviva’s policyholder, driving a Ford Fiesta, collided with the bus at less than 10 miles an hour, resulting in a mere £70 worth of damage to the bus.
All of the party-goers continued on to the nightclub without seeking medical attention, yet subsequently submitted 46 claims for whiplash injuries, totalling more than a quarter of a million pounds. Aviva discovered the claim as part of an operation in the North West focusing on staged accidents involving buses and multiple claimants.
Tom Gardiner, Head of Fraud at Aviva, said, “This claim highlights the outrageous scale of whiplash fraud in the UK being driven by the current system, and which frankly has become a national disgrace. We believe our customers are fed up paying for spurious and fraudulent injury claims through their premiums and they expect us to defend these claims on their behalf.
“In this case, our customer described the impact as ‘minimal’ – neither he nor anything else inside his vehicle was moved by the impact. In fact, the only damage to his vehicle was a one-inch split on his bumper. Given this, and the £70 worth of damage to the bus, it was highly unlikely that such a minor bump could result in so many injuries.
“Despite evidence the claims were bogus, 21 of the 23 litigated claimants were still represented by just two firms of solicitors at trial, resulting in considerable legal costs being incurred. This also highlights the abuse of courts and the significant drain on public resources as a result of fraudulent claims.”
But until change happens Birmingham continues to holds the unfortunate accolade of being the ‘crash for cash’ capital of England, whilst thousands of fake claims will continue to be made every year at the expense innocent motorists paying higher premiums.
The UK’s top 10 ‘crash for cash’ locations in 2015
2. North London
3. East London
6. North West London