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Types of insurance fraud

IFED investigates all types of insurance fraud including:

Motor Insurance Fraud

Motor insurance fraud is estimated to cost the UK insurance market over £1 billion annually. Opportunist claims are supplemented by claims orchestrated by highly organised and sophisticated criminal gangs.

Contrived accidents

This can include submitting a claim for damage sustained in a collision that did not occur as the result of an accident. For example, transporting pre-damaged vehicles to an accident ‘black-spot’ to create the impression an accident has occurred.

Induced road traffic accidents

The deliberately induced accident or ‘slam-on’ consists of organised criminals targeting innocent motorists by provoking collisions to facilitate compensation payment for this such as injury damage, hire vehicles, recovery and storage. Commercial vehicles are particularly popular targets.

Phantom passengers claims

Opportunist and organised phantom passenger claims can arise as a result of both genuine and staged accidents. Many induced feature vehicles packed with claimants, all of whom claim to have been injured

Staged Accidents

Depending on the complexity of the fraud, two or more individuals will deliberately crash their vehicles into each other, potentially resulting in claims for: damage caused, injuries sustained, car hire costs, vehicle recovery, storage etc.

Application Fraud

A policyholder dishonestly misrepresents or fails to disclose material facts in order to lower the insurance premium. This can include non-disclosure of claims history, points on a driving licence, and/or car modifications.

Fronting

A type of application fraud where a policy is purchased using another’s details to gain more favourable terms

Opportunistic Fraud

Opportunistic Fraud is not a ‘separate’ fraud type in the truest sense. Opportunistic frauds can be committed on all types of insurance, from motor or commercial liability personal injury claims to property, pet or travel insurance and beyond. It consists of an individual submitting a false claim either on a single or multiple occasions.

Commercial Liability Fraud

Employers Liability (EL) insurance is compulsory and insures for injury, disease or death to employees arising from their employment. Public Liability (PL) insurance relates to bodily injury or death to members of the public or damage to their property as a result of the company’s business activities.  Claims can be made by both the insured company and third parties.  Some are highly organised with a large total value, many are petty and opportunistic. Frauds include the exaggeration of genuine injuries and / or the loss incurred as a result of a genuine incident, or fictitious incidents.

Illegal Intermediaries (Ghost Brokers)

Illegal Intermediaries are described as “an individual or group, who set up policies for members of the general public, deliberately misrepresenting themselves as an insurance broker, agent or insurer for profit.”

They are a real threat to those in vulnerable communities such as non-English speaking communities or students looking for cheaper insurance. Illegal Intermediaries work by acting as a middle man between the customer and other brokers/insurers. They provide a fraudulent insurance policy by using incorrect information. Or give a completely fake insurance policy.

The customer will provide correct information to the “broker”, but they alter information provided to the insurer in order to reduce the price.  The insurance policy the customer pays for will be invalid because it will not match their true details.   They could be left uninsured without knowing about it.

Another tactic is to provide fake insurance documents for an inflated price which leaves the customer uninsured.

Professional Enablers

Professional enablers are the associated professionals e.g. solicitors, engineers, doctors and vets, who are complicit in submitting and progressing fraudulent claims, from staged accidents to fictitious personal injury claims. Other specialist service providers such as Accident Management Companies (AMCs), recovery agents and engineers also come under this umbrella.

Internal Fraud

Employees of insurers are in the unique position of fully understanding insurance processes and the triggers which may indicate insurance fraud. This knowledge can enable them to submit fraudulent claims and remain ‘under the radar’ or aid the progress of false claims submitted by others.

Data Theft

Information illegally obtained from insurance companies can be sold on to accident management companies or personal injury solicitors. In turn, personal information is misused to solicit and ‘induce’ potential claimants into submitting personal injury claims, sometimes with little regard for its validity.

Ways to Avoid Being the Victim of a Staged Car Accident

Keep your distance.

Keeping a safe distance will reduce your risk of running into the back of somebody, by allowing a greater stopping distance. Make sure you can see the tarmac below the tyres of the vehicle in front. 

Beware of Tailgaters.

By forcing you to concentrate on the car behind, the criminals will attempt to take your eyes of the car in front of you. The car in front is “in on the act” and will likely brake suddenly, forcing you to hit the back of them, because your concentration was on the vehicle behind.

Always look for brake lights.

Non- functioning lights can be a ploy to trap unsuspecting motorists. Take extra care in traffic until you are certain that the vehicle in front has fully operational brake lights. If a car looks to be slowing quickly and the brake lights are not illuminated, give that particular vehicle plenty of room.

Take extra care at roundabouts or areas where there is stop-start congestion.

Hectic roundabouts, especially at rush hour, can be an ideal opportunity for induced accidents. A typical example is where there is a gap and you are keen to follow, the car in front suddenly brakes and you follow – into the back of their car. Try not to rush at roundabouts and be wary of what the car in front is doing.

Beware of cars rapidly pulling out of junctions and then braking in front of you.

Be extra aware if you are a commercial vehicle owner.

Commercial vehicle owners are targeted as there is a high probability of the vehicle being fully insured and a company may be less likely to contest a claim. One scam involves two cars and a larger commercial vehicle. A car will drive in front of the commercial vehicle, and the second car will intentionally sway into the path of the car, forcing it to brake and the commercial vehicle to go into the back of the car in front.

Take extra care when in lanes.

Motorways and dual carriageways always require drivers to be extra diligent, but it is always worth being conscious of the middle lane. A car can deliberately pull from the outside lane (fast lane) and cause you to swerve into another car.

If you have been involved in an accident and hit the back of another vehicle, then do not panic.

If you are remotely suspicious then be as vigilant as possible. Report the incident in detail to the police as soon as possible, think about taking photographs of vehicle damage (as damage may be done to the vehicle after the event to make it look like the impact was much higher, thus allowing for a greater compensation claim as more damage was caused) and take the full details of the other party. Let your insurer know that you believe the accident was caused deliberately, and tell them why you think so.

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