Fraudsters have been the scourge of the insurance industry for decades – unfairly claiming compensation, costing insurers millions and helping to ramp up premiums for innocent motorists. However, just how are they managing to pull off their scams?
While the concept of crash for cash is certainly well-known, what may come as more of a surprise is the sheer range of methods that fraudsters are employing in order to secure payouts.
Now, a new study by Churchill
Insurance, reported on by Auto Express, has shed some light on the different methods being used. The study reveals that low-speed crashes are unsurprisingly the favoured method, now accounting for more than a third of all insurance fraud. However, the report also highlighted that fraudsters are increasingly using alternative methods too – such as claiming for non-existent passengers, which grew to 8% of all fraud last year, an increase of 2%.
“Fraudulent car insurance claims are on the rise, as opportunists try their luck at making exaggerated claims after a genuine accident or reporting injuries to phantom passengers, which have a knock-on financial effect on innocent customers,” said Mark Chiappino, counter fraud manager at Churchill.
Here is a breakdown of the top methods used for fraudulent claims according to the research:
- Low-speed impact (when both vehicles collide at low-speed, such as in a car park): 36%
- Organised fraud rings: 15%
- Phantom passengers (when the claimant was not in the vehicle at the time): 8%.
- Induced Road Traffic Accidents (when a motorist deliberately causes an accident with an innocent party, such as by slamming on the brakes): 8%.
- Staged Road Traffic Accidents (cases where both vehicles are complicit in a fraud): 7%.
- Exaggerated loss/ damage (when an accident occurs and circumstances are exaggerated): 3%.
- Indemnity/policy issues (based on a lie when the customer takes out a policy): 2%.
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