1 in 20 Young Drivers Admit Committing Insurance Fraud
One in twenty young drivers admit to having purposely staging or inventing road accidents in order to benefit from pay outs from insurance companies according to research by MoneySupermarket.com.
In Addition to this 1.3 million motorists admitted that they would consider such an act in the future when questioned as part of an anonymous MoneySupermarket.com survey.
The cost of fraud
According to the Association of British Insurers (ABI), there were on average 2,500 false car insurance claims made every week in 2010; a 9% increase over 2009. It is believed that this cost the insurance industry £2 billion over the course of last year.
Simon Douglas, who is the director of AA Insurance, attributes this to an increase in the number of personal injury claims companies advertising their "no win, no fee" services on television: "A proliferation of personal injury claim lawyers has led to the number of injury claims across the board sharply increasing, while fraud has eaten into insurers' costs."
This assumption has the backing of the BBC, who reported that the overall number of personal injury claims being made in the UK each year had increased by over 70% in the past decade.
The additional expense is ultimately being passed back on to motorists in the form of basic car insurance premiums, as insurers attempt to remain profitable. This has been confirmed by the AA who believes that average car insurance premiums have risen by 40% in the past 12 months.
MoneySupermarket.com's Peter Harrison has criticised motorists who commit 'crash for cash' offences, claiming that it "not only costs the insurance industry, but risks the safety of innocent drivers, passengers and pedestrians."
Harrison also claims that any motorist convicted of insurance fraud will also disadvantage themselves; as they will be severely restricted when it comes to purchasing car insurance policies in the future: "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 effects on your motoring as a consequence. If found guilty, an official 'fraud mark' could be added to your licence; this will prompt your insurer to void existing cover and probably refuse you cover in the future. In addition, insurers are also likely to pass your details to the police for prosecution."
"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."
The changing tide
Attempts are underway to counteract this problem, with Justice Secretary Kenneth Clark believed to be entertaining the idea of implementing a complete ban on the advertisement of 'no win, no fee' legal services on television.
Additionally, the Association of Personal Injury Lawyers has vowed to provide lawyers with better training so that they stand a better chance of identifying fraudsters: "Obviously there is no place for fraudulent claims in the legal system and the Association of Personal Injury Lawyers has been actively liaising with those directly involved in this issue, including the Insurance Fraud Bureau: if lawyers have more intelligence about possible fraud at the outset of cases, they can work even harder to stop it at source."
The ABI are also stepping in, with their representative Nick Starling declaring that they will be setting up a national insurance fraud register and working with a new division of the police which will be dedicated to insurance fraud: "Early next year, we will be setting up a national insurance fraud register, which will contain details of all known insurance cheats. And at the same time the first ever national police insurance fraud investigation unit will begin its operations, making it harder than ever to commit insurance fraud."