New form of motor fraud worries brokers

Motor insurance fraudsters are using motor trade policies to avoid paying the required premiums while still ensuring their vehicles are in the Motor Insurance Database.

DNA Insurance Services (DNA) says it has seen a “significant increase” in the number of false policy applications over the last six months. The niche motor broker has implemented new fraud prevention measures as a result, with customers making an application for trade insurance now required to provide proof of their trading activities.

DNA director Alf Costa said: “We have noticed an emerging trend where unscrupulous characters are looking to take out motor trade road risks policies to avoid paying the correct premium for their correct risk profile. The frequency has certainly also increased in-line with escalating car insurance rates.

“The impact of this worrying trend is two-fold. Firstly it can render the driver’s insurance policy null and void, leading to the full range of issues created by a lack of cover when a claim arises. Second, it can have a serious negative effect on the profitability of a brokers’ book of business and the overall account of the supporting insurer.

“While all brokers need to proactively vet their own clients for potential issues, this is yet another form of motor insurance fraud that can only be addressed through the vigilance of the market as a whole.”