But a more deep rooted problem can be found in the massive increase in compensation claims companies offering potential claimants the chance to sue with their ‘no win no fee’ advertisements.

Commonplace in the USA, there has been a massive growth in the last decade of companies offering this particular service in the UK, anyone unfortunate enough to watch daytime TV will have been bombarded with adverts for this service.

For many the temptation is obviously too great and some are even prepared to fake an injury for sometime in order to make a claim that they know is fraudulent.

The LV= report says that the most common ‘fake claim’ is whiplash, followed by post traumatic stress and strained muscles. One of the fake claims included someone making a car insurance claim even though they weren’t in the vehicle at the time of the alleged accident.

While another fraudulent claimant said she had been run over by a bus when she had only fallen off the side of the curb.

LV= claim that personal injury claims have pushed up the cost of the average car insurance by £100 per year to £300 and 60% of solicitors say that they have witnessed an increase in exaggerated injury claims over the past decade.

Almost ninety per cent of solicitors agree that the no win no fee system encourages people to make fraudulent claims.

LV= technical claims director Martin Milliner said;

“Genuine cases of personal injury where another person or company is at fault are certainly cause for compensation. However, drivers who invent or exaggerate their injuries to make a claim not only break the law but also push up the cost of car insurance premiums for all motorists.”

Hastings Direct and sister brands, Renew, Insure and Likewise are investing in state of the art technology that will help them to seek out and reject the customers who are likely to make a fraudulent claims at point of sale.

Fraudulent claims are said to cost the motor insurance industry £1.9 billion each year and cost the innocent motorist an extra £100 per year on their insurance premium.

A pilot scheme that was set up a couple of months ago by the group, revealed that 15% of potential clients had given incorrect driving licence details, such as using old licences to get around speeding convictions and the like.

Chief executive of Hastings Direct,  Edward Fitzmaurice, says:

“We feel strongly about the fact that honest drivers, who have built up their no-claims bonuses, should not be forced to ‘bail out’ those who are intent on trying to defraud the system.”

AA

Motor insurance has risen at it’s fastest pace in 15 years according to a report from the AA, with the rising cost of personal injury claims and insurance fraud having a major effect on the premiums that we pay.

The average premium quoted for comprehensive motor insurance rose by 5.6% in the last quarter up to September 2009 and has increased by 14% overall in the last twelve months.

The scary part is that insurance companies are still selling motor insurance as a loss leader, hoping to encourage motorists to buy other more profitable insurance products. The industry currently pays out £110 for every £100 taken in premiums and AA Director of Insurance Simon Douglas says that at current levels a rise of 20% would be needed to return the industry to profitability.

The compensation culture that has crossed the Atlantic to the UK in recent years is proving to be a massive burden on motorists in particular as anyone involved in an accident these days is urged to seek a pay out for personal injury, with many companies willing to take up the case on a no win no fee basis.

Personal injury claims reached £9.6bn last year while insurance fraud cost the industry £1.9bn.

350,000 cases of crash for cash fraud

A 24 year old man from Manchester has been jailed for his part in a massive ‘crash for cash‘ scam involving at least 93 car crashes in a period of three years.

Mohammed Patel charged other vehicle owners £500 a time to stage an accident which enabled the owners to claim for bogus damage from insurers – each accident costing insurance companies an estimated £17,000.

Patel earned over £46,000 for his part in ‘fixing’ the accidents that normally involved low speed crashes, where the car in front would brake suddenly ensuring the car behind collide with it.

The rogue claimants would then demand compensation for personal injury, courtesy cars and legal fees through the innocent parties insurers, the court was told.

The scam was revealed following a tip off from office workers who overlooked a particular roundabout that was used regularly by Patel to stage crashes. Workers had noticed  a string of accidents where the same person was driving the lead vehicle.

Investigations carried out by AXA Insurance company, themselves victims of the fraud, were passed to Greater Manchester Police who then made the arrest.

Patel was jailed for four and a half years after admitting to the court his part in the conspiracy.

350,000 cases of crash for cash fraud

“Desperate times do often call for desperate measures, but surely this is a step too far for British motorists”

So says Steve Sweeney the head of insurance at MoneySuperMarket.com after revealing the results of research last week that showed that over one million drivers in the UK have considered deliberately crashing their vehicle to make a fraudulent insurance claim.

Incredibly, almost 350,000 UK motorists have successfully staged such an accident according to claims made by the researcher. Male drivers and Londoners are allegedly the most likely to consider the scam.

“We have all been affected by the recession in one way or another, but crashing for cash is not only illegal but willfully endangers the lives of others. Organised motor fraud not only costs the insurance industry millions, but risks the safety of innocent drivers, passengers and pedestrians.” said Sweeney.

Insurance fraud costs honest motorists an additional average of £40 per year on their insurance premiums. Drivers being caught attempting to make a fraudulent claim will struggle to find insurance cover in the future.

And yet when charged for ‘driving without insurance’,  under new government proposals, the accused can and probably will walk away with a paltry £50 fine, less than the fine dished out to somebody who may overfill their dustbin – as Direct Line’s Andy Goldby points out.

“The fact that the new proposed fine for driving uninsured is less than if you were to overfill your bin is alarming. The Government’s proposed Continuous Enforcement programme will catch more uninsured drivers, but if the fines are less than the average insurance premium then it’s not going to stop them from re-offending.”

With premiums for young drivers reaching ridiculous figures, many see the option of a fine and losing their vehicle as a reasonable option to buying insurance, while the rest of us continue to pay for their crime with higher premiums.

Shanti Andrews and Rebecca Turner, both 23 years old had been told they would have stay in the cell in Rio de Janeiro until their case is due to be heard in three weeks time. An emergency court application overturned the original judge and allowed the prisoners to be freed on bail.

The females are now staying in a hotel until the case comes to court they will not be allowed to leave Brazil as their passports have been confiscated. The original judge had shown some concern that the girls were likely to flee the country if they were not locked up.

The insurance scam was uncovered after the females reported the theft of personal items, claimed to have been stolen on a bus journey, to the police. The suspicious police officers discovered the ’stolen’ items hidden under the bed in the hostel that the accused were staying in.

The report says that home insurance content’s claims for accidental damage or loss have soared by more than 25% in the first quarter of  2009 compared to the same time last year.

Damage to laptop’s is the top claim with clumsiness attributed as the main cause, often involving a spilt drink. The report says that home decorating can be a nightmare often resulting in damage to television sets and carpets.

In all 46% of claims made are for accidental damage or loss and the most accident prone are in the 45 to 54 year old age group.

James Furse, MD of greenbee.com, has warned that many may be disappointed should they have to make a claim, as the standard home insurance policy does not cover accidental damage/loss.

The bridegroom Andrew Singh  was sentenced to twelve months, along with parents Graham Singh and Niramella Singh. The family had made the claim against a local transport company, when two of the three coaches they had hired to transport guests to the wedding, were involved in separate accidents.

The Singhs’ had claimed for whiplash injuries but were found out when a wedding day video supplied by the Singhs’ to prove they were on the coach, showed them dancing hours after the accident!

The Singhs’ were ordered to pay court costs of £73,000.

While co-ordinated efforts by the police and insurance companies have seen a drop of 11% in incidents of the scam over the last two years, MORE TH>N claim that levels of awareness have not risen during that time.

They claim that two thirds of motorists would not know if they were a victim of a deliberate or staged accident, while almost a third would not know what to do if they found themselves victims of the scam.

For those unaware of the scam, MORE TH>N describe it as when a criminal gang deliberately cause an accident with an innocent motorist, with the intention of making a false or inflated claim. This is often achieved by shunting the victim from behind or braking late and hard to ensure the victim hits the rear of the offending vehicle. Fraudsters will often have disabled brake lights making it more likely to be hit by a following vehicle.

Motorists who suspect that they have been involved in a staged accident should say nothing at the scene and advise their insurance company of their suspicions. Photo’s of the accident scene, vehicle damage and occupants should be taken if possible.