Home

Services

Our Support

CARAT

News & Press Releases

Contact Us

News & Press Releases

Press Release

10 Most Popular Motor Fraud Influenced by Credit Crunch

An article appeared in the Motor Times publication produced by the Insurance Times on the subject of insurance fraud and the credit crunch.

Gabrielle Stewart, Technical Director at Absolute Fraud Management, a specialist firm, rated the top 10 motor frauds being encountered, some of which were already endemic but others she believed to be influenced by the credit crunch, these are as follows, together with her comments as reported.

• Cash for crash. This continues to be the most significant and dangerous form of motor insurance fraud. The staged collisions are planned by organised crime networks, and investigators say it is known the money received from claims pay-outs have gone to fund other criminal operations, including terrorism.




• Misrepresentation of information when applying for a policy. In the past three months the number of fraudulent policy applications has soared by 14% - a very significant jump for one quarter and a direct link to increased financial pressures, says Absolute technical director Gabrielle Stewart. “People are directly lying about their driving history and even falsely claiming to keep their vehicles in a garage at night. They are doing this to try and keep the cost of their premiums down” she adds.



• Staged motor thefts. The financial downturn has left many drivers in arrears when it comes to paying off their motor loans, says Stewart. “It’s a direct situation” she says. “People unable to get credit are taking out logbook loans against their vehicle.” The financing for such a loan can be as high as 470% APR, which many find impossible to pay back. “We are seeing a huge spike in these types of loans” she adds. As such, investigators are finding more people are reporting their vehicles stolen just prior to repossession to claim on the loss and pay back their loans.



• Vehicles reported stolen after drink driving-related collisions. Stewart says Absolute investigators have noticed a rise in vehicles reported stolen but then recovered with no signs of forced entry. Further investigation reveals that the driver was involved in a drink-driving collision but then abandoned the vehicle and fled the scene prior to the arrival of the police. “We can’t say for sure this is a result of the economic downtown, but there has been a real increase recently, so I imagine there is a correlation” says Stewart.

 

• Staged thefts to cover the cost of another claim. Some have tried to save on the cost of premiums by taking out basic third-party, theft or fire policies. Investigators from Absolute have discovered cases where drivers have been involved in a collision but because it is not covered by their policy, stage a theft to get the pay-out for the damages.



• Staged thefts of 4x4 vehicles. With fuel prices reaching gouging levels and road tax bands increased to up to £400, drivers are finding it extremely difficult to afford or sell their 4x4s, says Stewart. So some have faked the theft of their vehicles to cash in on the loss.



• Fraudulent bankers’ drafts. People are increasingly being tricked into accepting forged bankers’ drafts when selling their vehicles privately, says Stewart. The criminals come to the owner’s house, strike up a rapport and because of the current pressures to sell, the drafts aren’t thoroughly checked. “These are very clever criminals” says Stewart. “We have seen cases where even police officers have been duped by this. “The fraudster then makes off with the vehicle and can use it for a variety of insurance-related claims, including staged collisions.



• Arson. Policyholders covered for fire are increasingly turning to arson to get their claims pay-out. Stewart says some feel it is a more foolproof route to get rid of their vehicles because the fire destroys the evidence. However insurers are increasingly using forensic experts to investigate any cases that might seem suspicious.



• Policies taken out with stolen credit cards. This is a relatively new fraud for the insurance industry and one that only began appearing in the past quarter, says Stewart. Investigators are beginning to see links between certain identities and addresses that indicate this form of fraud is more organised.



• Policies taken out with a fake identity. Although insurers are quick to cancel a policy as soon as it is apparent the policyholder has used a false identity if the fraudster gets away with the crime, the insurer is highly exposed to false claims and staged collisions.

Archived News & Press Releases

- Latest News
- July 2010
- June 2010
- May 2010
- April 2010
- December 2009
- October 2009
- August 2009
- June 2009
- April 2009
- March 2009
- February 2009
- January 2009
- December 2008
- November 2008
- October 2008
- August 2008
- July 2008
- June 2008
- November 2006
- October 2006



Please use the log in facility below to enter the CARAT system.