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Insurance fraud rise blamed on ‘cash for crash’ scams

April 25 2014

A spike in ‘cash for crash’ scams and counterfeit whiplash injury claims is being blamed for a sharp rise in insurance fraud detected by one of the UK’s biggest insurance companies.

Aviva says it discovered more than £110m worth of fraudulent claims in 2013, which is a 19 per cent rise on the previous year.

The company is currently uncovering 45 fraudulent claims a day and has cited the economic climate as a factor.

Although policy holders continue to submit inflated or invented claims, Aviva has said there is an increasing rise in third parties making claims against its customers.

Examples include spurious injuries as a result of an accident as well as claims by organised gangs.

Aviva’s head of fraud Tom Gardiner told the Guardian: “We are witnessing a trend toward third party injury and organised fraud. For example, in 2013 we identified fraud in one in nine third party injury claims.”

Aviva has warned that the challenging economic climate, the fact that many people see it as a victimless crime, and a lack of effective deterrents are all helping to drive up the number of insurance fraud cases.

Motor injury is the most common type of insurance fraud, accounting for 54 per cent of Aviva’s total detected claims fraud costs.

More than half of these involve cash for crash scams, where people submit false claims for damage and personal injury in relation to car accidents that either never happened or were staged.

“We are witnessing a trend toward third party injury and organised fraud. For example, in 2013 we identified fraud in one in nine third party injury claims,” added Tom.

The company is currently investigating more than 5,000 suspicious injury claims linked to known fraud rings – an increase of 20 per cent since 2012.

The Insurance Fraud Bureau estimates that one in seven personal injury claims are linked to suspected cash for crash claims, with the total annual cost to insurers for these scams estimated at £392m.