'Crash for cash' scams are run by mafias, says Aviva

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Organised crime gangs are behind a spike in “crash for cash” accidents that are costing motorists £400m a year, insurer Aviva has claimed.

The FTSE 100 company warned that Birmingham, Luton and London were the worst spots for road traffic accidents being deliberately caused in order to claim whiplash compensation. So far this year, it has seen a 21 per cent increase in organised fraud with more than 6,500 suspicious injury claims linked to known fraud rings.

“Crash for cash is not just a financial problem – it’s a serious social problem,” Tom Gardiner, head of claims fraud for Aviva’s UK and Ireland business, said. “No other form of insurance fraud puts the public at risk of serious injury.

“Imagine you’re driving the kids to school when the car in front slams on its brakes without warning, leaving you no chance of avoiding a crash. These deliberate accidents are on the increase, putting innocent motorists at risk. Last year Aviva found they increased by 51 per cent.”

According to Aviva, crash for cash adds an estimated £400m to the cost of motor insurance policies – or around £14 per driver.

The warning was echoed by its rival Esure, which also voiced concerns that bodily injury claims are starting to rise again, hitting hopes of a recovery across the sector.

Government reforms have been introduced to counter the rise of Britain’s growing claims culture, including the Legal Aid, Sentencing & Punishment of Offenders Act 2012 that put the brakes on no win, no fee legal cases.

Before the rules came into force last year, all claimants were able to keep damages awarded in full with the losing side paying the claimant’s legal costs. Now, however, claimants have to pay a success fee – limited to no more than 25 per cent of the damages awarded.

Stuart Vann, Esure’s chief executive, said increased claims are likely to impact the company’s profitability, measured by its combined ratio, this year. Combined ratios indicate underwriting profitability, with figures below 100 per cent meaning more premiums are taken in than claims paid.

“With regard to claims, we have previously said it was too early to assess the impact of the reforms,” he said. “Recent data from the Ministry of Justice claims portal suggests that claims inflation is starting to re-emerge, driven by an increase in small bodily injury claims frequency.

“The group continues to set claims reserves on a prudent basis and, therefore, now expects the combined operating ratio for the full year to tick up towards 92 per cent, assuming normal weather for the remainder of the year.”