Crash fraud driving up cost of car insurance

YOUNG drivers are increasingly prepared to stage motor accidents in order to claim on their insurance, according to figures published as insurers warn that such fraud continues to drive up premiums.

Research by moneysupermarket.com, out today, found that 15 per cent of motorists less than 35 years old would consider staging an accident to claim on their insurance, with one in 20 having already done so. Staged accidents typically involve two vehicles deliberately bumping into each other in order to claim on insurance. There has also been a rise in contrived accidents - where motorists claim for incidents that didn't actually take place - and induced collisions, where a driver makes a deliberate action, such as sudden braking, to force an innocent motorist to crash into them.

Steve Sweeney, head of car insurance at moneysupermarket.com, suggested the trend was indicative of desperate measures in desperate times. "We have all been affected by the recession in one way or another, but crashing for cash is not only illegal but wilfully endangers the lives of others. Our research reveals there are motorists causing this type of fraud and getting away with it. Organised motor fraud not only costs the insurance industry, but risks the safety of innocent drivers, passengers and pedestrians."

Fraudulent claims are forcing insurers to increase premiums for honest motorists, he added, an observation supported by AA Insurance. Its most recent quarterly car insurance tracker revealed premiums are rising at a faster pace than at any time since 1994. The typical comprehensive car insurance premium rose by a record 30.9 per cent in the year to the end of June, it showed.

Simon Douglas, director of AA Insurance, said insurance fraud was a major reason for the rising pace of premium inflation. For every 100 insurers take in premiums they have been paying out up to 122 on claims, according to Douglas, largely due to fraud.

He said: "It's not just criminally organised 'cash for crash' fraud, deliberately stopping a car so that the one behind crashes into it, leading to claims for accident damage and associated costs including whiplash injury.

"There's evidence suggesting that thousands of people are attempting this themselves - perhaps to get someone else to pay for past damage and to make a claim for non-existent whiplash injury. This is extremely rash and puts peoples' lives at risk."

The increased use of price comparison sites to buy insurance has also facilitated greater insurance fraud, Douglas claimed. He added: "It is much easier to manipulate information on a computer screen to find the cheapest price - for example, by changing the facts about past driving experience.

"But insurers are getting wise to this and are finding that cheap premiums inevitably lead to excessive claims.It's interesting to note that premiums on the price comparison sites are rising fastest of all."