Crash-for-cash Insurance Fraud

Alex Norris Excerpts

Wednesday 22nd May 2024 Westminster Hall

[Alex Norris (Nottingham North) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Ms Fovargue. I frequently get the opportunity to take part in debates that the hon. Member for Carshalton and Wallington (Elliot Colburn) leads in this place, because of his very important work on the Petitions Committee. Today, his leadership of this debate in the interests of his constituents was characteristically thoughtful, particularly when he talked about the advice he would give in these cases. That was a public service contribution that we cannot repeat enough. As the hon. Gentleman said, this is a constantly evolving crime type, and we must evolve our efforts to match it. I congratulate the hon. Gentleman on securing the debate and on his contribution.

Colleagues have set out how important this issue is, and the impact of these scams on victims and the insurance industry. It also impacts on wider local services, including the NHS and the police, which are already stretched at the moment. This is a serious problem. The financial impact of this kind of fraud is significant, with fraudulent claims pushing premiums up for ordinary motorists, as the hon. Member for Carshalton and Wallington mentioned.

It always enriches debates when colleagues bring their own personal experiences into the room. When my hon. Friend the Member for Mitcham and Morden (Dame Siobhain McDonagh) talked about how she felt, I double-underlined one word she used: “stupid”. There is nothing stupid about it at all. That is how life feels when we engage in good faith with someone who is actually quite a polished and artful scammer, about something that did not happen.

My hon. Friend the Member for Mitcham and Morden mentioned the particular vulnerability of mums on the school run, as did the hon. Member for Carshalton and Wallington. When they are busy protecting loved ones and performing an important function in their life, and then stop to engage with someone who has set out that day to defraud, of course they would end up feeling daft. How do we compete with that level of polish and organisation? It is happening up and down the country every day. I will return later to the points that my hon. Friend made about hotspots, because that is a particularly important part of what we can do to look at solutions in the future.

Insurance fraud is a blight on our society. “Crash for cash” is a catch-all term used, for instance, where people deliberately stage or cause a road traffic collision for the purpose of financial gain. The police describe three different types of crash-for-cash fraud. First, there are staged accidents, when someone makes a claim for an incident that they have deliberately staged with another individual. Secondly, there are ghost accidents, when someone makes a claim for an incident that never occurred. That will not directly impact on our constituents in the same way, because they are not enforced parties to it, but it does impact us through our insurance premiums. We know that this is a regular, routine happening.

Finally, as we have spoken about quite a bit today, there are induced incidents, when someone makes a claim after intentionally causing a collision with an innocent motorist. Hon. Members have mentioned their experiences and those of their constituents, but we have also seen videos of this online. The footage is staggering: people driving their scooter or running in front of a car, creating a collision and throwing themselves to the floor, and then getting up and creating a drama and a scene that they know the innocent party will not want to be part of—certainly not if they have young children in the car. There is a sadness here, because although those filming the incidents are best protected through whatever capabilities they have in the car, I do not really want to live in a society where I must go on the road filming and surveilling what is happening to be protected from people trying to scam me. That is not a world we want to live in, or ought to have to live in.

The hon. Member for Glasgow Central (Alison Thewliss) mentioned taxi drivers. Being off the road or having issues relating to insurance or their licence is significant for them—this is their livelihood—so I can understand why they take the decision to record to protect their businesses. Those who seek to scam are pushing well-meaning, law-abiding citizens into that type of behaviour every day.

We have heard a little from colleagues about how this issue makes people feel, but we cannot stress it enough. It makes them feel that they are no longer safe on the roads or in their communities; every time they are driving, they dread that it may well happen again. Again, that is not how we want people to feel when they are driving their cars.

Driving is important and, by its nature, risky. We do not want people to flinch every time someone moves in front of them or goes around them, thinking they are seeking to create a collision, but that is how people across the country who have fallen victim to these crimes feel. That is notwithstanding the fact that for someone to seek to induce a collision, whether or not they were successful in clipping or skimming, is exceptionally dangerous, as is doing something that makes someone act reflexively, which puts others at risk too. This is a safety issue, as well as being an issue of insurance premiums and cost.

I hope the Minister might be able to tell us something about scale, but I am not sure that the crime statistics on which we would usually rely give us enough detail to identify the number of crash-for-cash offences in insurance-related fraud or to identify the trends. However, the number of crash-for-cash cases investigated by the insurance fraud enforcement department is up 15% since 2021, so there is clearly a behaviour change. The industry itself has made its own estimates.

The IFB estimates that around 170,000 car insurance claims between October 2019 and the end of 2020 were linked to crash-for-cash fraud schemes. That is significant —multiple thousands of incidents every single day. As my hon. Friend the Member for Mitcham and Morden mentioned, Allianz reports that the number of accidents has increased by a quarter in 2023. We know that this is happening and that organised fraudsters see it as an attractive type of crime. It is an important issue.

At a time when people are struggling—people up and down the country are still feeling financial challenges—the impact on premiums is significant. Inflation is in the news today, but whatever the rights and wrongs of that conversation, insurance prices in the first quarter of this year are up a third on the first quarter of last year. We always encourage our constituents to shop around, but we know that that is a bill that people are feeling. By its nature, it is a big bill—three and sometimes four-figure sums of money that come in one go—and people are feeling the pressure. It makes a significant contribution. No one should think that this is a victimless crime, because it very much is not; we will all suffer from it. What conversations has the Minister had with the industry about what it can do to combat fraud and to ensure that those costs are not piling up on ordinary motorists?

I have a few points to make to the Minister about what we could be doing on the issue. First, as my hon. Friend the Member for Mitcham and Morden said, the Government’s fraud strategy does not include it. Fraud by its nature is a shape-shifting, ever-changing endeavour by people who seek to profit by doing the wrong thing, so that document by definition has to be a living and breathing one. What can the Minister do to include it? If it is not to be included in the strategy, can he provide an assurance that it is seen as a priority?

The IFB has highlighted the 30 most-challenged postal districts in this regard. If this issue is affecting certain communities, that is a good hotspot policing- type approach that we could take. The issue links back, as so often in these debates, to the fact that there are 10,000 fewer neighbourhood police. We have made our own commitments in that space and will continue to argue for them. This is the type of behaviour that individuals undertake if they think there will never be any accountability, just like retail crime—for example, if someone feels that they can walk in and nick stuff from the meat counter because there is no uniformed presence. Insurance fraud is similar. We need a uniformed presence on streets in areas where we know those crimes are taking place, so that there is that deterrent and sense that the streets are contested and that those who do the right thing are being backed up by the agencies we rely on to support them.

Finally, I know that there is a limit to the things the Minister can say in this space, but the reality—again, this is the same for retail crime—is that organised gangs that operate with sophistication in stealing at a staggering scale in the retail space do not just do retail crime; they do trafficking for sexual exploitation, forced labour, drug dealing and all sorts of organised crime. Breaking one element can help us break all those elements. I wonder whether the Minister might talk a little about the model used by the fraudsters who operate in this space—whether they are stand-alone fraudsters or part of the greater industrial-scale fraud that we see across a variety of different topics. As I say, if we can crack them on this, we can crack them on all sorts of things. It has been a good debate, and I hope the Minister will address some of those points.