A recent investigation carried out by the BBC has revealed a new motor car insurance scam that has been spreading, with criminal gangs defrauding millions of pounds from the nation’s car insurance companies.
The fraud revolves around falsified claims being made for replacement cars provided to drivers while their own vehicle is undergoing repairs, experts say. Cheap car insurance industry experts say that more decisive action needs to be taken in order to disrupt the con, which increases car insurance rates for customers and costs insurance providers approximately £60 million per annum.
It is a top priority for the Association of British Insurers to both reduce and deter such fraudulent activity, fraud investigators informed the BBC. Criminal gangs operate the scam by setting up bogus car hire and claims management firms in order to capitalise on the growing replacement car provision market, and the gangs use a variety of methods to attempt to pull the wool over the eyes of car insurance providers, as these criminals view the scam as both low-risk and lucrative.
Some instances of fraud have included charges made to insurers for vehicles not actually provided. Other known methods include ‘hiring’ the same vehicle to as many people as possible for the same period of time, thus maximising the return by making a separate claim for each fabricated hire, and another tactic employed by scammers is to provide a basic vehicle to a driver and then charge the insurer for the provision of a top-of-the-range model instead.