Anti-fraud campaign warns drivers to watch out for these car insurance scams

Wednesday, 30th September 2020, 8:25 am
Updated Wednesday, 30th September 2020, 8:26 am

A new anti-fraud campaign is highlighting a number of common car insurance cons amid fears that insurance fraud could be on the rise.

The Stop the Scams campaign has been launched by the Insurance Fraud Bureau (IFB) after new data showed a five per cent increase in fraudulent insurance claims in 2019, with motor fraud being the most common.

Sign up to our daily newsletter

The i newsletter cut through the noise

The IFB predicts that the current economic climate could push this up further, with data showing a 17 per cent increase after the 2008 financial crisis.

Insurance scams cost innocent consumers £3 billion a year in inflated premiums and payouts for fraudulent claims, and at least one criminal claim is made every minute in the UK.

Ben Fletcher, Director of the IFB, said: “With Covid-19 causing so many people to lose out financially it sadly means there are more opportunities for insurance scammers to exploit the vulnerable. These fraudsters don’t care who suffer - from the elderly to key workers, we’ve seen them get targeted.”

To help the public spot and avoid fraud, the IFB has put together a list of some of the most common scams. If you think you’ve been targeted by any of the below, or any other time of insurance fraud you can report it to the IFB Cheatline online or by calling 0800 422 0421.

Ghost brokers

A ghost broker is a fraudster who poses as an insurance provider to sell fraudulent insurance deals on social media.

With the pandemic causing so many people to struggle financially, ghost brokers are exploiting the situation by selling unrealistically cheap and entirely fake car insurance which can leave victims facing court and having their car seized for driving without insurance.

Ghost broker scams are rising. The IFB has seen its investigations into the issue double in recent years. Research also shows one in three 18-24 year-olds has seen a suspicious insurance advert on social media.

Crash for Cash

This involves a fraudster who intentionally drives dangerously (such as slamming on theirbrakes with a car close behind) to cause an innocent motorist to crash into them so they canclaim for compensation.

With many people still getting back into the habit of driving after months of reduced activity, the risk of falling victim to a crash for cash is higher if driving skills are not up to scratch.

One in every ten injury claims for a motor collision is linked to a suspected crash for cash.The scam often leaves victims injured and facing the loss of their no claims discount.

Not every crash is an innocent accident (Photo: Shutterstock)

Compensation scams

This is when a fraudster or unscrupulous firm contacts someone out of the blue to tell them they may be entitled to compensation. These scammers can offer to recover a range of financial losses but are best known for contacting people who have been in a car crash.

If convinced, victims will hand over their personal details which can be used to steal their identity or bank funds, or they could be encouraged to take out a fraudulent insurance claim. With many individuals facing financial hardship more people could be susceptible to the scam.

Mark Allen, fraud and financial crime manager at the Association of British Insurers, said: “Insurance fraud is no victimless crime. While the Coronavirus crisis has led to financial hardship for many, no one should think that committing an insurance fraud is a path to easy money. From getting a criminal record and possibly a  jail sentence, to finding future insurance and other vital financial products like mortgages and loans, much harder to obtain and more expensive, the consequences of committing fraud will be severe and long-lasting.”