Crash for cash schemes cost insurance industry £340 million a year

Crash for cash schemes - where fraudsters stage collisions in order to profit off insurance claims - remain a "real and growing" threat for drivers according to vehicle protection and management technology provider, AX.

Crash for cash schemes are among the most prevalent types of insurance fraud. The Insurance Fraud Bureau (IFB) says the scams cost the industry around £340 million a year. 

Data from industry body, Cifas, shows that motor insurance fraud is one of the fastest growing categories of insurance fraud in the UK. Last year, Cifas revealed that fraudulent car collision claims increased 45% year-on-year – well above an average of 27% across all categories of insurance fraud.

"Some criminals have used the Covid-19 pandemic lockdown to plan motor insurance frauds, and they are now intent on cashing in at the expense of innocent motorists," said Director of Investigative Services at AX, Neil Thomas.

Experts, including the ABI (Association of British Insurers) agree there are three main categories of crash for cash schemes: staged collisions , ghost collisions and induced collisions.

In staged collisions, fraudsters intentionally damage vehicles to give the impression that a real crash has occurred. This could involve taking a sledgehammer to a parked car, or even intentionally crashing two vehicles – whatever it takes to fabricate the evidence.

Ghost collisions happen when a someone submits a  fictional claim for a collision that never took place. It takes advantage of instances where claims are never fully investigated. Lastly, induced collisions are the most notorious tactic. This is where the scammer drives in an erratic or manipulative way, hoping to engineer crashes that appear legitimate.

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The most reported technique is braking hard while driving in front of another car, causing a rear-end collision. Other common reports include drivers flashing their lights at junctions to let other drivers out - only to crash into them on purpose, and where the fraudster extorts cash from the driver at the roadside rather than through their insurer.

"These scams are often carried out by well organised criminal gangs. If you suspect that you have been a victim, do not put yourself at risk and report your suspicions to the police and your motor insurer immediately", said Malcolm Tarling, spokesperson for the Association of British Insurers (ABI).

Experts recommend the following tips to counteract crash-for-cash schemes:

• Be vigilant. It's often possible to identify cars used in traditional slam-on collisions because they have rear-end damage from previous scams. Also watch out for erratic driving and passengers looking back as they could be waiting to tell the driver when to slam the brakes on.
• When a collision happens, drivers should gather evidence safely at the scene. Note key facts and where possible identify potential witnesses
• Invest in a dash cam and/or telematics. Dash cams record everything while you drive and can be very useful in proving you weren't at fault in case of an accident.