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Motorists are being warned to be extra-careful on the roads as the number of deliberately set-up 'crash for cash' accidents increases. According to the Insurance Fraud Bureau (IFB), 'induced accidents' - whereby drivers deliberately cause a crash so as to profit from bogus insurance claims - are fast becoming a serious national problem, as well as costing the insurance industry over £200m in payouts.
Richard Davies, deputy chairman of the Insurance Fraud Bureau, (IFB) an industry-funded body set up to investigate fraudulent claims, says: 'When this scam first started, it was confined to the north west of the country, but now we're seeing incidences across the south east, with a particular increase in cases around London. It's got to the stage that this is now an issue of national concern and safety. The thought that there are drivers who want to take you off the road is horrifying.'
In the past month more than 10 people have been charged with conspiracy to commit fraud through dangerous driving in Manchester, while 25 people were arrested in London for acting as false witnesses in a large crash-for-cash ring involving top-of-the-range cars.
Adrian Webb from insurer Esure says: 'The phenomenon of induced accidents is one of the fastest-growing areas of serious claims fraud. It's also the most dangerous. Most fraud doesn't physically hurt anyone, but with this, if the fraudsters get their timing wrong with the brakes, they could kill someone.'
In a crash-for-cash accident, the fraudulent driver will typically brake suddenly when coming off a motorway junction, causing the car behind to go into the back of them. Drivers involved in the scams have been known to disable their brake lights so that the car behind will have no warning to slow down.
Once the parties involved have swapped insurance details, the fraudsters will start making claims for damage to their cars and for personal injuries they don't have - and in some cases, making them for people who weren't even there, often claiming for the maximum number of passengers their vehicle can hold even if they were the only person in it at the time. In some organised crash-for-cash rings, people will act as 'phantom witnesses' saying they were at the scene of the accident when they weren't.
Davies says crash-for-cash fraudsters are likely to claim for whiplash - severe pain and stiffness in the neck, back and shoulders - because it generates some of the biggest insurance payouts. The cost of whiplash alone accounts for around £66 of every UK car insurance policy. According to the Association of British Insurers (ABI), whiplash makes up around 75 per cent of personal injury claims, or more than a thousand every day, an increase of 25 per cent over the past five years.
Since whiplash is common in road accidents and difficult to diagnose - it doesn't show up in medical scans and sometimes isn't experienced until a few days after the accident - it can be hard for insurers to tell whether the claim being made is genuine or not.
Law-abiding drivers are paying the cost of non-genuine claims: the IFB estimates that the cost of fraud adds at least 5 per cent to an insurance premium. If you happen to be caught up in a crash-for-cash scam, you will lose your no-claims bonus, and face higher insurance costs after the claim has been made against you.
Because of the nature of the fraud, there is no way of knowing that you've been caught up in an induced accident until your insurer receives a claim for damages from the other party. It can also take months for an induced accident to come to your insurer's attention since they will only begin investigating it if the witness statements from the claimant don't add up with the policyholder's version of events.
Webb says: 'You might have told your insurer that there was only one person in the car, but then we'd get a claim through for five people. It's at this point that we'll realise that someone is simply trying to make money out of this.'
• If you think you are a victim of an induced accident, tell your insurer and contact the IFB on 0800 328 2550.
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