Written evidence from ACPO Vehicle Crime
Intelligence Service (CMI 31)
In recent years the cost of motor insurance has risen
sharply. All the current market trends indicate that further large
increases should be expected. A number of factors contribute to
the increases which are reflected in the premiums paid by vehicle
users. In each of these templates a short description is given
of causes and consequences together with some early thoughts on
how they might be addressed.
PROBLEM SUMMARY
Driving Without Insurance
Collectively, increased third party claims, increased
litigation costs, the temporary use of replacement vehicles (courtesy
cars), increased personal injury claims and suspected organised
criminal activity in regard to fraudulent collision claims are
forcing an increase in motor insurance premiums.
The increased cost of motor insurance is leading
to an increasing number of vehicle users, particularly young people,
driving without insurance cover or operating the vehicle under
cover provided to another person (often a parent). In some cases
this practice, referred to as 'fronting', invalidates the
policy.
EVIDENCE BASE
1. The Motor Insurance Bureau (MIB) estimates
that 5% of vehicle users drive without insurance - this equates
to 1.75 million vehicles in regular use.
2. 54% of uninsured drivers are estimated as
being in the 17-29 age group.
3. Typical rates for new and young drivers between
the ages of 17 and 22 are over £2400 per annum for male drivers
and £1400 for females.
4. Uninsured young or new drivers are all the
more significant because analysis undertaken by Thatcham (August
2008) revealed that an 18 year old driver is over three times
more likely to be involved in a crash than a mature driver.1 in
5 new drivers has a crash within one year of qualifying.
5. A report from the Select Committee on Environment,
Transport and Regional Affairs showed that although 17-24 year
olds hold only 11% of driving licences, they are involved in 25%
of fatal and serious injury accidents annually. Over 3,000 young
drivers aged under 25 are killed or seriously injured on UK roads
each year.
6. In 2008, 185,000 uninsured cars were seized
by the police. This is more than twice the number that were seized
in 2006.
SCALE
The Motor Insurers Bureau (MIB) applies a levy representing
about 3% of premiums on all insurers to cater for claims against
uninsured drivers. In 1991 this fund amounted to £39 million.
By 2009 it had risen to £407 million.
The MIB paid out £500 million in compensation
to 30,000 claimants in 2009 where the third party to a collision
event proved to be uninsured.
INTERVENTION OPPORTUNITIES
AND SOLUTIONS
A. Continuous Insurance Enforcement scheme
B. Police led targeted vehicle seizure campaigns
utilising ANPR
C. Intelligence led investigations and interventions
PROBLEM SUMMARY
Increased Impact of Personal Injury Claims
Despite significant decreases in serious road traffic
collisions within the UK, successful claims for whiplash injury
have increased to the highest rates in Europe. Many are considered
fraudulent.
A number of third party companies actively pursue
and support parties involved in collisions to submit injury claims.
Many do so on a no-win, no-fee basis
An increasing proportion of the cost associated with
settling claims is incurred in payment of legal fees. The average
legal cost to damages award ratio is now 1.08:1
EVIDENCE BASE
1. The number of road traffic collisions that
result in death or serious (life changing) injury has reduced
by 30% over the past 10 years.
2. Despite this, personal injury claims doubled
between 2002 and 2009 to £14 billion each year.
3. 430,000 people now make whiplash injury claims
each year.
4. Between 42% and 51% of each compensation award
is now attributed to legal costs.
SCALE
There were 163,554 road accidents reported to the
police involving personal injury in 2009, 4% fewer than in 2008.
Of these, 21,997 accidents involved serious injuries, 5% fewer
than in 2008 (23,121).
INTERVENTION OPPORTUNITIES
AND SOLUTIONS
A. Claims analysis to identify suspect groups
(repeat claims, geographic and temporal anomalies)
B. Claims analysis to identify "rouge"
claims management operators
C. Targeted intervention and investigation
PROBLEM SUMMARY
Fraudulent Claims
Insurance fraud is becoming increasingly complex.
Induced motor accidents are an example of organised fraud, where
an innocent motorist is forced to crash into the back of the fraudster's
vehicle. Claims are then made against the innocent motorist, and
these often include accounts of fictitious injuries from gang
members, some of whom may not even have been involved in the accident.
In many cases criminal gangs have bogus claims running with numerous
insurers at the same time. Other examples of organised insurance
crime include fraudulent arson or disability claims and supplier
fraud, where insurers receive bills for work that has not been
done.
EVIDENCE BASE
1. The Association of British Insurers (ABI)
reported a 30% increase in fraudulent claims between 2007 and
2009 with the associated cost rising from £1.6 billion to
£1.9 billion.
2. Insurers are exposing an average of 2,300
fraudulent claims across on policy areas, to the value of £16
million, each and every week, the vehicle insurance share of this
total in financial terms is £7.9 million per week (£410
million in 2009).
3. The Insurance Fraud Bureau (IFB) estimates
that there were 30,000 staged collision claims in 2009 at a cost
to insurers of £350 million .
4. Costs are ultimately borne by the honest motorist.
The cost of fraud is estimated by the IFB at £44 per annum
on each and every policy
SCALE
The ABI estimate that £930 million of motor
insurance fraud went undetected in 2009.
The ABI estimates undetected general insurance claims
fraud totals £1.9 billion a year. Of this figure, the IFB
estimates the insurance industry's exposure to fraudulent organised
motor insurance claims is £350 million per year. This costs
honest customers over £4 million every week.
INTERVENTION OPPORTUNITIES
AND SOLUTIONS
A. Intelligence-led targeted investigations undertaken
by police-led multi-disciplinary team.
December 2011
| 
