2021-05-24

Crash for Cash and the impact of COVID-19

This blog post was authored by Aylish Power, Trainee Solicitor, Manchester office.

The Insurance Fraud Bureau (IFB) has published the UK’s top 30 “Crash for cash” scam hotspots this month. The report is based on the IFB’s analysis of 2.7 million motor insurance claims made across the UK between October 2019 and December 2020.

“Crash for Cash” is a common insurance fraud scam in which individuals will fabricate, stage, or, on the more extreme end of the scale, cause, road traffic collisions with a view to bringing claims for compensation. Although these scams can be carried out by opportunistic individuals, many are orchestrated on a much larger scale by serial fraudsters. My colleague Zoe Alexander wrote an article on this to set out the problem in more detail.

The IFB hopes to raise awareness of these scams to everyday road users, particularly those who regularly drive the roads in these postcodes. However the list can also be utilised by insurers and claims handlers as it highlights those areas in which these scams are most prevalent, and encourages vigilance when dealing with claims for accidents in these areas.

The impact of COVID-19 government restrictions on Crash for Cash scams

As with previous years, large urban areas have remained the most popular locations for fraudsters. Topping the list in 2021 is Birmingham, followed closely by Bradford, Walsall, Blackburn and Romford. There have however been notable shifts in the top hotspots this year.

The data released by the IFB this year could be seen as an indicator as to the impact COVID-19 government restrictions have had on fraudsters. In May 2020 the IFB reported that there had been a big drop in reports of Crash for Cash scams since government restrictions on travel were imposed. Both Manchester and Liverpool had placed highly on the list in previous years, however both cities were also subject to tighter local restrictions for a longer period in 2020 than other locations that have featured on the list. This year Manchester and Greater Manchester have seen a fall in the number of hotspot postcodes on the list as compared to previous years, and Liverpool fell off the list altogether this year, again suggesting correlation between travel restrictions and a decrease in Crash for Cash scams.

The previous list, published by the IFB in 2017, also showed that the majority of post codes were located in the Midlands or the North of the UK. Whilst the latest data suggests this more or less remains the case, there has interestingly been an increase in the number of postcodes in London and its surrounding areas, with Romford and Ilford emerging as gaining popularity amongst fraudsters.

Challenges presented by the return of Crash for Cash fraudsters

Last May, the IFB warned drivers to be particularly wary of “Crash for Cash” scams, as they expected to see a rise as restrictions were eased and more drivers took the roads. As we once again emerge from a period of government restrictions, the IFB’s warning of last year should be borne in mind.

More sophisticated fraudsters whose cashflow relied on these scams prior to COVID-19 government restrictions will seek to return to the roads. At the same time, we may also see more and more first time fraudsters adopting these approaches. An increase in fraud in an economic downturn is nothing new, however an increase in opportunistic fraud presents challenges of its own, as tools for detecting fraud by looking at past patterns can’t necessarily assist here.

Be aware!

In these circumstances, it will be important to ensure that fraud processes remain adaptable and automated detection can really assist where that process is enhanced with machine learning based on the changing risks. This can help to ensure that potential fraud is not missed and false positives excluded as far as possible.

The extent of the impact of COVID-19 government restrictions on Crash for Cash scams may remain to be seen, and the next published list by the IFB will determine whether these changes were due to the unusual circumstances of the last year or are more long-lasting. In any event, road users and insurers will do well to remain wary of the likely rise of these scams as we once again emerge from restrictions.