Temporary motor insurance offers fraudsters ‘vast and immediate opportunities to exploit’

As motorists return to the roads following the lifting of the UK’s lockdown restrictions this summer, ”the new norms of temporary motor insurance, increased vehicle rentals, carpooling and other shared ownership schemes” will provide fraudsters with ”vast and immediate opportunities” for new crash for cash scams, according to Synectics Solutions’ insurance product specialist Chris Hallett. 

He told Insurance Times that these emerging motor insurance trends will ”offer fraudsters vast and immediate opportunities to exploit” innocent drivers.

For example, while a frictionless, digital onboarding experience may seem to offer the ideal customer experience, establishing policies and supplying cover online represents a “fraudster’s dream scenario”, said Hallett.

He continued: “To put this in real terms – there is little point overnight batch screening and identifying a potentially fraudulent application the day after a four-hour insurance policy has lapsed.”

However, this “only tells us part of the story” around the new angles being explored by crash for cash scammers, he added. 

Hallett explained: “We all know the whiplash reforms came into effect during the pandemic and as an industry, the feedback is that it’s too soon to understand the true impact [of this] yet.

“Certainly, the organised criminal element operating in the motor claims space began to change its fraud modus operandi a long time ago to accommodate the changes in legislation, albeit the pandemic temporarily reduced the volume of vehicles and innocent road users for them to target with crash for cash scams.”

Part one of the whiplash reform under the Civil Liability Act came into effect on 31 May 2021, introducing a tariff table for whiplash injury compensation amounts and an Official Injury Claim portal, to enable litigants in person to progress their own whiplash claims online. 

Fraud facts

Observing more vehicles now getting back on the roads, Allianz Insurance’s head of counter fraud James Burge echoed Hallett’s sentiments. He said: “Crash for cash gangs will have more opportunities to stage collisions.”

However, “in our experience, we know that they’re targeting fleet vehicles – with vans on last mile delivery particularly exposed, as well as individual motorists”, he added.

According to figures published by the Insurance Fraud Bureau (IFB) in May 2021, Birmingham, Bradford, Manchester, London and Luton are the worst affected postal districts for crash for cash scams.

Whiplash fraud, in particular, currently accounts for 60% of all fraudulent motor claims detected by insurer Aviva – this follows a 20% increase in the proportion of staged and contrived claims since the end of 2019, according to the insurer’s annual fraud figures, published in June 2021.

Rob Lee, fraud prevention director at Aviva, said: “The increase in detected whiplash fraud underlines the importance of the whiplash reforms – these will reduce the disproportionate compensation and fees in the system, strike at the root cause of whiplash fraud and help to keep premiums low for genuine customers.

“At the heart of the increase in fraud are the recessionary factors caused by Covid-19, which have arguably created the biggest fraud threat to customers in a generation.

“Currently, government intervention is mitigating many of these financial impacts, but unfortunately, we expect to see significantly more fraud in the coming year.”

Moving fraudster focus

Meanwhile, Ben Leech, partner in the fraud team at Keoghs, explained that the law firm has witnessed an increase in Google ad spoofing contributing towards fraudulent motor claims, as scammers diversify their crash for cash approaches.

Google ad spoofing is when fraudulent accident management companies pose on online search engines as the claims department for insurers - this is achieved by purchasing certain ad words on Google, for example.

For victims of this type of fraud, the “innocent individual is funnelled down the path and before they know it, they’re being given vehicles to drive whilst their car is being repaired – believing it’s all being arranged by their insurance company”, Leech explained.

He feels the increase in Google ad spoofing is ”reflective of the fact that certain professional enablers whose bread and butter are fraudulent incidents – so that’s your typical crash for cash incidents – have had to slightly migrate where they’re looking at because traffic flow has been so reduced [during the pandemic] that there wasn’t the opportunity to have those deliberately staged incidents, so they’ve had to move their focuses”.

He continued: ”That’s absolutely an area of evolution that we’ve seen throughout the pandemic and I suspect it’s not one that will go away unless some steps can be taken.

“There’s been a lot said about the need to address this problem and the Online Safety Bill is an obvious starting point as to where we could look to introduce something to try and protect innocent people from these companies that are masquerading as insurance companies.”

Defeating fraud threats

Considering these shifts in crash for cash fraud, what can the insurance industry do to curb the risk?

Although there is “no silver bullet” or “one-size-fits-all solution”, Hallett explained that “the good news is there are a number of very good products on the market providing real-time solutions to fraud risk screening”.

He continued: “You need to take a holistic approach to counter fraud data matching, machine learning and predictive analytics to minimise your fraud exposure and you need to make sure you do it in a real-time environment - that and a dedicated, enthusiastic and motivated counter fraud team.

“The human element will always be the cornerstone of any successful solution.”

In terms of protection from crash for cash incidents for fleet drivers, Burge said “the solution isn’t purely technological and nothing can beat driver awareness”.

He said: “Fleet managers should train and support their drivers so they keep a safe distance, stay alert and spot the signs of a crash for cash scam.

“Telltale signs include the other driver appearing unphased by the collision, exaggerating their injuries, or handing over insurance details without having to look for them.

“It is important that fleet drivers are given this information and look out for the warning signs.”

Burge added that brokers may want to encourage customers to consider dashcams, as this technology is “always helpful to debunk fraudulent claims” and “it seems scammers dislike video evidence”.

For Aviva, on the other hand, the “good news” is that although it expects to see more fraud in 2022, “we broadly expect it to be the same types”, said Lee.

However, he continued, the business will “remain vigilant for new types or methods [of fraud] and [is] continuing to invest in strengthening [its] fraud controls over the next two years to protect genuine customers and to keep premiums low”.