Insurers uncover 4,000 fraudulent motor insurance applications a week

In a bid to save themselves money, many motorists in the UK are submitting dishonest insurance applications, new figures reveal.

Statistics released by the Association of British Insurers (ABI) show that over the course of 2014, insurers uncovered a total of 212,000 fraudulent applications. This equated to more than 4,000 dishonest applications each week – a rise of 18 per cent on the total from 2013.

Common lies included not disclosing unspent convictions or previous insurance claims when asked and providing a false postcode or address from a lower risk area.

So-called ‘fronting’ was also prevalent. This involves parents insuring vehicles in their names when in fact their sons or daughters are the main drivers. As it states on the website Chill.ie, this practise is illegal.

‘The risks are just not worth it’

Responding to the findings, fraud and financial crime manager at the ABI Mark Allen noted that insurers are aware innocent mistakes and oversights do sometimes occur.

However, he added that anyone who lies in order to access cheaper cover risks driving illegally. In a warning, he stated: “The consequences include getting a criminal record and a massive financial headache if found to be at fault for a crash. The risks are just not worth it.”

The expert went on to state that industry initiatives like the Insurance Fraud Register, a database of known insurance fraudsters, are reducing the scope for dishonest applications.

Beware ‘ghost broking’ scams

As well as being the perpetrators of insurance fraud, motorists can themselves fall victim to scams. Highlighting this fact, the ABI drew attention to the phenomenon of ‘ghost broking’. This refers to schemes that involve illegal insurance advisers selling bogus policies to drivers. According to the ABI, the criminals behind these scams may use professional looking websites and they also operate in public places like car parks, clubs and university campuses.

One advisor had made £65,000 by selling fake policies before being arrested and sent to prison for two years. Another had sold insurance to over 100 people in West Yorkshire before his crimes were discovered. Currently, the Insurance Fraud Bureau is dealing with 26 cases of ghost broking.

To avoid being fooled into buying fake policies, the ABI recommended that drivers should get their cover from a reputable source and they should avoid insurance sold on social media networks and in pubs, clubs and newsagents. To check if a firm is authorised, people can search the Financial Services Register. Meanwhile, if drivers want peace of mind about existing policies, they can look on the Motor Insurance Database operated by the Motor Insurers’ Bureau. This holds records of all vehicles insured in the UK.

Car cover ‘is a very competitive market’

Offering advice to motorists keen to get the best deals, the ABI said it is a good idea to shop around. The association stated that car cover is a “very competitive market”, with brokers, insurers and price comparison websites all offering deals. The organisation also pointed out that people can cut their premiums by improving vehicle security and opting for higher voluntary policy excesses.