UK motorists are paying significantly higher premiums than they were just a few years ago, thanks to the increasing number of fraudsters submitting false claims.
Last week there were widespread warnings from fraud investigators about a new “flash for cash” scam, but this is just one of the many ways in which criminals operate with the intention of fleecing insurers.
According to the AA, the average annual premium has increased by a whopping 89% to £840. False claims have been a huge contributing factor in the rise, insurers say. Consequently, millions of people now lie to cut the cost of their policy. You can read more about that here.
We’ve listed the five most common scams which are driving up the cost of premiums for the honest motorist.
Submitting False Injury Claims
False personal injury claims are becoming an increasing problem in the country, with 570,000 people putting in claims for whiplash alone every year. This drives insurance up by £2 billion, adding £90 to the cost of the average driver’s premium. The difficulty involved in proving or disproving the validity of a claim encourages motorists to try for an easy pay-out.
This has led to Britain being dubbed the “whiplash capital of the world”. It now accounts for 78 per cent of all personal injury claims in the UK, compared with just 3 per cent in France.
Staging Car Thefts
Some fraudsters will stage the theft of their car by dumping it somewhere and claiming it was stolen, after which they will put in a claim for the cost of the vehicle. Again it is tough for insurers to prove whether the car actually was stolen or not, and criminals will often go as far as to set fire to the vehicle or drive it into a river.
Intentional Crashes And Accidents
Only last week we highlighted the warnings from fraud investigators of a new “flash for cash” scam, a variation on the well know “crash for cash”, and criminals are constantly coming up with new ways to make money through intentional accidents. Not only does it cost insurers hundreds of millions of pounds every year, but it is also incredibly dangerous and can have a lasting effect on the innocent motorist.
False Hit-and-Run Claims
Similar to staging the theft of a car, it is common practice for criminals to intentionally write off their vehicle and then claim that they were the victim of a hit-and-run accident. It’s almost impossible for insurers to prove if another car was actually involved in a crash, unless the area is covered by CCTV cameras, and it often results in a large sum for the fraudster.
Insurers Colluding To Increase Profits
It isn’t just motorists who are driving up costs for the honest motorist. It’s not uncommon for insurers to point drivers in the direction of garages in their approved repairer network in order to maximise their own profits. Repairs will take place instead of replacements, while costs are also kept down through non-genuine parts. This can create financial problems through faults further down the line, simultaneously compromising the safety of the driver.
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