The UK is witnessing a surge in car insurance fraud, with the number of incidents reaching unprecedented levels as drivers attempt to lower their vehicle costs. Reports reveal that insurers detected over 33,000 fraud cases last year, amounting to £157 million.
Application deception is the most prevalent type of fraud, involving policy abuse, misrepresentation, and identity theft. ‘Ghost brokers,’ criminals who manipulate policy details to reduce costs, are also contributing to the problem. These brokers often use social media to lure consumers into fake insurance deals that may not exist or are invalid.
Ben Fletcher, director of fraud at Allianz UK, stated, “Insurance fraud is a serious problem that pushes up the cost of policies for honest consumers and adds to insurers’ costs.” He added, “The vast majority of claims are genuine, and our focus as a business is to ensure we settle those promptly, but the sad reality is that some people will go to enormous lengths to make fraudulent claims.”
Fraudulent activities cost the insurance industry approximately £430,000 per day. Fletcher attributes the increase in fraud cases to the rising cost of living and financial struggles, which have driven up the price of vehicle ownership. “We are resolute in our determination to identify and defend against any type of fraud and use a variety of methods to detect it,” Fletcher said. “We share information with the police and other insurers to prevent fraud and will not hesitate to prosecute cases. Potential fraudsters need to understand that if you try and commit fraud, then be warned, you may end up with a criminal record.”
The delivery industry is under particular scrutiny, with a notable rise in fraud involving moped and motorcycle riders attempting to avoid suitable insurance. Insurers have also noted increases in “non-tariff injuries” being reported. The Insurance Fraud Bureau is currently investigating over 6,000 suspected fraudulent motor insurance claims, many linked to “crash for cash” schemes.
One case involved the collaboration of an insurer with the City of London Police to prosecute three men involved in a £100,000 “cash-for-crash” scheme. The fraudsters deliberately staged a collision involving an Aston Martin, claiming it was worth £60,000. The scheme was uncovered due to inconsistencies in the group’s accounts and the actual vehicle damage.
Following a three-week trial at Gloucester Crown Court in August 2024, a jury found the men guilty of fraud by false representation and perverting the course of justice. Data from the Home Office revealed that 84,400 fraudulent claims were made in 2023 alone. The Association of British Insurers (ABI) detected claims worth £1.1 billion, a 16% rise compared to the previous year.
