The impact of motor insurance fraud and how to curb the menace

Fraud is one of the greatest enemies of the insurance industry, costing providers over £1.5 billion in fraudulent claims and £1 billion in lost premiums.

Fraud in insurance can happen in a number of different forms, for example: 

• Fraudulent claims where a car owner sets up a fake accident or car theft and launches a claim with their insurer
• A vehicle owner who wants to pay a cheaper insurance premium could provide false information, implying that they are at a reduced risk of an accident
• Mechanics can inflate repair costs for vehicles involved in accidents
• Insurance fraudsters, who pretend to be professional advisers, selling doctored insurance policies to unsuspecting car owners

Vehicle insurance fraud affects all drivers and vehicle owners, knowingly or unknowingly. These scams lead to increased costs in premiums and delayed processing and payment of claims, as insurance companies need to conduct thorough investigations to prove an accident actually did occur.

Steps to take to prevent insurance fraud

The most important is accident fraud protection. Insurance companies ought to provide conditions to be followed after a vehicle is involved in an accident. This includes taking photos at the scene of accident containing the cars involved, the people around who may have witnessed the incident, road signs and scenery.

Police should be called immediately after an accident to prevent fraud perpetrators from intensifying their own vehicle damage to inflate the claim. One should also make sure they make the correct record of the accident.

Be wary of people presenting themselves as ‘good Samaritans’ at accident scenes, who pretend to know ‘good’ service providers. These seemingly kind people may be scammers and are likely to recommend corrupt towing companies, auto repair shops, doctors, or even fake lawyers.

Insurance industry stakeholders, together with the government, should provide public education on the consequences of being part of insurance fraud. Fraudsters should be exposed to harsh criminal prosecutions as a deterrent.