Crash for cash scams still ‘a strategic priority’ as lockdown offers organised fraud opportunity

Despite the Covid-19 pandemic lockdowns resulting in motorists driving less miles and fewer vehicles being out on the roads, ‘crash for cash’ scams have still been prominent as quieter driving conditions “offered an opportunity, perversely, for organised [fraud]”, said Ruth Needham, partner at law firm Keoghs.

According to data published by the Department for Transport last month, the total number of cars declared off the road or SORN, which stands for Statutory Off Road Notification, rose annually by 259,000 vehicles in December 2020.

As roads were therefore quieter, Needham said this gave fraud rings the opportunity to stage accidents in less predictable locations to try and outfox insurers.

Speaking at Insurance Times’s June Fraud Charter roundtable, in association with Carpenters Group, she explained: “We’ve definitely seen the numbers go up in fraud rings generally, but [the pandemic] actually offered an opportunity.

“There [were] quieter roads, there [were] quieter areas for these things to happen, so having a slam on [while driving] on the M60 or M62 wasn’t as big a risk as it may have been in different scenarios.

“We’ve seen some really strange and unusual cases that we might have historically gone ‘that can’t be a staged accident because of the circumstances’. You have to look at actually when did it happen, what time and date? Yeah, it could [be a staged accident], they weren’t taking such a risk in doing that.

“Staging going into the back of somebody on the M60 because ‘oh I had to slow down because there was traffic in front of me’ – there wasn’t, there was no traffic on the road that day, you just created that accident.

“We see more of that type of scenario happen over lockdown. It offered an opportunity, perversely, for organised [fraud].”

Paul Holmes, partner at DWF, agreed with Needham’s analysis. He added that families involved in crash for cash scams five or so years ago are now returning, perhaps because other criminal activities have been harder to engage in during the pandemic.

“The bad people never go away,” he added.

For David Royal, policy and claims fraud manager at Aviva, “there’s certainly not been a drop off” in crash for cash cases.

“We’ve seen broadly similar levels of combined, staged, contrived, induced accidents but we’ve seen the mix change slightly more to the contrived and staged side and a little bit of a drop in induced [accidents], but the overall numbers are broadly the same,” he noted.

Strategic priority

Fraud Charter chair and Carpenters Group director Donna Scully added that crash for cash fraud is “still alive and well” and “a big issue”.

This perspective is reinforced by data published by the Insurance Fraud Bureau (IFB) in May 2021 that revealed the postcode hotspots where crash for cash scams most commonly occur.

The ABI’s manager of fraud and financial crime Mark Allen said it came as no surprise that Birmingham came out top here.

“It remains a strategic priority and as more cars return to the road following lockdown, people might not have been driving as much as they had previously, so they might not be so aware of it, so it’s just a case of reinforcing the message,” he added.

Furthermore, cases such as the 44-ton lorry that crashed on the M62 “really [highlights] the dangers, not just the financial harm caused by scams like crash for cash”.

Allen added that the Insurance Fraud Enforcement Department (IFED) is also investigating a number of crash for cash cases, “which are coming up for sentencing as well”.

The IFB data estimated that of 2.7 million motor insurance claims that were made across the UK between October 2019 and December 2020, around 170,000 could be linked to suspected crash for cash networks.

Pricey payouts

Other motor-related fraud trends noted by Fraud Charter attendees included an uptick in policyholders looking to write off expensive vehicles that have been left unused during the Covid lockdowns.

Needham explained: “There’s been a slight increase in more high value vehicles and the interpretation we’re putting on that is people have had a car sat on the drive for 12 months, 18 months and they’re thinking ‘why am I paying for that?’

“I can just get it written off and I’ve got my [guaranteed asset protection] insurance that I’ll use as well as my actual insurance – I’m quids in, I’ve got money in the bank and I can put a [Ford] fiesta on the drive for the odd time I have to go into the office.

“There’s been more of those, using a scrappy old car to write off a far more expensive, newer car.”

Similarly, Holmes has noted “an uptick in first party fraud”.

He continued: “Your expensive car, usually the person has got no proof of funds [for] how they bought it in the first place and it unsurprisingly goes missing, probably shipped off abroad.

“We’ve always had these types of claims, but we’ve definitely been busier dealing with them over the lockdown period.”

Scully added: “That just shows you that the appetite is still there and the nerve.”

However, Holmes added that insurance professionals “have to be careful as genuine thefts of vehicles also went up” during lockdown.

“It’s important not to mix up increased fraud with increased genuine thefts that we have seen,” he said.