A new generation of car accident claims fraudsters is responsible for a sharp rise in car insurance premiums.
The type of scams carried out by the fraudsters often involve groups of drivers agreeing to stage 'cash for crash' accidents and then splitting the proceeds of any payout. One of the most common frauds involves personal injury claims, such as inventing whiplash injuries or exaggerating the effect of a minor car accident.
'Cash for crash' frauds also include the 'slam on' scam where a driver brakes suddenly at a roundabout or junction, causing the innocent driver behind to crash into the vehicle.
In many cases, the first car is filled with passengers, who all claim for exaggerated injuries. The fraudsters then also claim for the cost of repair or replacement of their vehicle on the innocent driver's insurance.
One of such car insurance claims happened when best friends Katie Ashcroft, 24, and Jodie Jackman, 23, arranged for a 'Mr Fixit' to crash their cars into each other before ringing their insurance companies to falsely claim they had been in a car accident. Friends and family also falsely claimed to have been passengers in the cars and made claims for personal injury compensation to back up their story.
But the scam was exposed after 23 year old Ms Jackman, an administrative clerk, was suspended from her job with the Probation Service and managers accessed her e-mail account.
The AA has revealed that the average comprehensive policy has rocketed by more than 30 % over the last year from £538 to £704 and warns that the rise is likely to continue.
Simon Douglas, director of AA Insurance, said he won’t be surprised if, by the end of 2010, we'll have witnessed a 50% rise in car insurance in just two years.'
In addition to the cost of second hand cars and rising fuel prices, the rise in car insurance is discouraging news for motorists.
The knock on effect on motorists who are genuinely involved in accidents is that they are being encouraged to submit inflated claims by some lawyers whose large bills are also contributing to the rise in the insurance costs.
This news has raised concern that the number of uninsured drivers will rise, as motorists will decide not to pay the premium. The Association of British Insurers said it was "possible" the rises in the cost of insurance could lead to more uninsured drivers taking to the roads, but uninsured drivers are more likely to be caught thanks to advancements in number plate recognition technology which alert police when a vehicle is uninsured.
Currently around one million motorists do not have insurance. This is thought to cost insurers around £500 million a year.