Insurance industry ‘crash for cash’ claims are “reckless and irresponsible” says a leading law firm after mounting a six-month investigation involving eight Freedom of Information (FOI) requests to police forces across the UK.
Thompsons Solicitors instigated the research after an internal review of its own client work found no evidence to support a report by the Insurance Fraud Bureau stating that “one in seven” personal injury cases “costing £392m annually” are linked to ‘crash for cash’ scams.
The firm, which is launching a publication called ‘Tracker’ to monitor and expose insurance industry double standards, commissioned freelance journalist Nick West to look into the claims made by the Insurance Fraud Bureau (IFB).
During the course of the research, the House of Commons Transport Select Committee published its own report questioning a separate claim by insurers that ‘fraudulent’ personal injury claims had cost £811m in 2013.
Insurers “reckless and irresponsible”
“If ‘crash for cash’ crime really was so common, we would have seen some signs of it among the thousands of cases we handle every year for people injured in road accidents,” said Tom Jones, head of policy at Thompsons Solicitors.
“We’ve seen the media coverage of several high profile cases so we accept the problem exists but the insurers have been both reckless and irresponsible to publish figures that appear at best to be unreliable and at worst knowingly false.”
Figures could not be explained
Nick West’s research, which involved eight Freedom of Information (FOI) requests to police forces across the UK, as well as several interviews, found that:
- Five forces had no data specifically on ‘crash for cash’ and two forces failed to reply
- The one force that could provide information, Derbyshire, had undertaken only two investigations into fraudulent traffic accidents three years ago but none since
- A ninth force, City of London Police, could not provide information or explain the figures
- A spokesman for the IFB could not explain where the “one in seven” and “£392m” figures came from.
“Our researcher spent nearly six months on this and continually ran up against a brick wall when trying to get someone to explain the figures,” said Tom Jones.
“This has only served to confirm our suspicions that the insurance industry puts out figures that are exaggerated or false. The impression given is that there is a ‘pandemic’ of fraud and that’s why premiums are so high, but it appears that simply isn’t the case.
Justice being undermined
“Thompsons is concerned that wildly inflated claims made by insurers are being used to undermine the law and damage the justice system in Britain.
“This investigation emphasises the importance of the call made by the House of Commons Transport Select Committee for the Government to ensure that public policy and police action on insurance-related fraud is based on reliable data that has been independently verified.”
The £392m ‘crash for cash’ figure is not the only unexplained claim made by the insurers about the cost of fraud.
Policy must be based on strong evidence
In May, the Association of British Insurers (ABI) said there had been 59,900 ‘dishonest’ motor insurance claims in 2013 with a value of £811m, figures that the Government quoted when announcing new measures restricting the rights of accident victims.
The Transport Select Committee said in a report published in July that it was not clear how the ABI arrived at these figures or what counts as ‘dishonest’.
The cross-party committee of MPs, which described the insurance industry as “highly dysfunctional”, said: “The Government should act to ensure that there exists better data about fraudulent or exaggerated personal injury claims, so that there is a stronger evidence base for decisions.
“Since the Government has cited the ABI’s figures for dishonest claims in 2013 it should explain how the figures have been arrived at and how ‘dishonest claims’ have been defined.” at and how ‘dishonest claims’ have been defined.”
Some weeks after the original publication of this story, solicitors for the IFB wrote to Thompsons providing the information about ‘IFB’s methodology’ which we had been seeking to clarify. They also unequivocally denied knowingly using false or exaggerated figures.
The IFB says that their ‘fraud’ figures “encompass those [cases] that are successfully defended as well as those that do not result in any enforcement action being taken but that are identified through a number of fraud indicators”.
“The figures contained within (the IFB) report are used to measure the extent of claims linked to suspected fraud activity and therefore the industry’s potential exposure to this type of fraud”. The IFB has been able to link 'suspected fraud' to 1 in 7 personal injury cases.
However, the IFB’s lawyers insisted “publication of the specific fraud indicators utilised by our client would be counter-productive to its objectives” but also that the IFB did not publicise unreliable data on crash for cash fraud recklessly, irresponsibly or based on unsound research or data samples. It strongly refutes any suggestion or inference that it publishes information it knows to be false or incorrect.
Text updated on 10 November 2014.
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