Car Insurance Industry: Fraud

Mark Garnier Excerpts

Wednesday 22nd April 2026 Westminster Hall

[Mark Garnier (Wyre Forest) (Con)]

It is a great pleasure to serve under you this afternoon, Ms Lewell, and I thank the hon. Member for North Shropshire (Helen Morgan) for securing this important debate. We have heard quite a lot of depressing stories about how people have been scammed and ripped off, and all colleagues will agree that more needs to be done to tackle fraud and spoofing in the car insurance industry.

Whether it is crash-for-cash scams, ghost broking or paid ad spoofing, our constituents are all being ripped off on so many levels; not just the cost itself, but the increase in insurance premiums. These practices are also harming the insurers and our wider financial services industry. The Minister will therefore agree with everyone in the room that more needs to be done to tackle this problem, but I hope she will reflect on colleagues’ comments about whether the Government are actually going far enough to tackle it.

To give some context, fraud is a threat that is becoming more prevalent every year. In 2024, fraud accounted for 44% of all crime reported in England and Wales, with about £1.16 billion of fraudulent general insurance claims identified. On the car insurance industry specifically, a 2024 report from the Association of British Insurers said:

“Motor insurance continues to be the area where insurers see the most illicit claims occurring, and they detected 51,700 motor scams worth £576 million.”

The ABI’s data suggested that that accounted for 53% of all fraudulent claims that year. It is safe to say that there is an issue that needs to be rectified, that we need to do more to protect our constituents and that we need to work closely with the industry to resolve this issue.

The thrust of this debate is paid ad spoofing, which is a very problematic but less well-known practice affecting the car insurance industry. According to the ABI, four in five people have never heard of it, so it is welcome that we have the opportunity to discuss it and raise its profile today. As the hon. Member for North Shropshire set out, paid ad spoofing is when fraudsters mimic legitimate businesses. They pay for ads to appear in search results when a customer searches for a legitimate service.

In the context of car insurance, the ads usually refer to unscrupulous claims and accident management businesses, and tend to relate to those who have been involved in an accident. As Direct Line states, the practice relies on

“the fact that in the aftermath of an accident, you might not be as vigilant as you’d otherwise be, searching quickly on your mobile and clicking on the first option you see.”

Fundamentally, these organisations are relying on a consumer believing they are dealing with their own insurer. They then arrange various services that the consumer’s insurer would provide, adding more cost to the process. This is all done with the aim of recovering costs from the insurer, but if the insurer challenges the charges, the drivers are the ones left to pick up the bill.

Understandably, those affected—such as the constituents of the hon. Member for North Shropshire—feel ripped off, and the companies that pretend to support them are actually exploiting them. The last Conservative Government understood that, which is why we instructed the Financial Conduct Authority to become responsible for claims management companies in 2019. As a result, firms must be authorised by the FCA to carry out their activities, and repeated violations will result in their authorisation being removed. It also means that customers can escalate complaints to the financial services ombudsman.

However, I understand that accident management activities are currently unregulated, so will the Minister outline whether the Government are considering regulating those activities of claims management companies? I would also be grateful if she could provide an assessment of the resolution process for customers, and whether she thinks improvements need to be made.

The other central issue is how these practices are allowed in the first place. Fraud is often complicated and involves many different actors. Consumers and insurers have a part to play in tackling it, but the actors, such as technology firms and social media platforms, should also bear responsibility; after all, they are the delivery mechanism for this fraud.

We should acknowledge that some technology firms have taken action, and Google is a good example. In 2021, it required companies advertising financial services to demonstrate that they are authorised by the Financial Conduct Authority, which is a positive step. But more needs to be done, and we need a joined-up approach.

The Government’s fraud strategy was an opportunity to do that. Although it is broadly welcome and recognises the role of technology firms in tackling fraud, not one of its action points requires change from them. Could the Minister set out why that decision was taken and what steps she is taking to ensure that responsibility is correctly allocated when it comes to fraud?

Fraud in the car insurance industry is a serious issue, and I am grateful to the hon. Member for North Shropshire for bringing it up. Fraud in general is becoming an issue of national security, and we need to get a handle on it. The Government should continue working with all actors to stop these practices, and we will support them when they try to do so. Consumers also need to remain vigilant to these practices.

I conclude by flagging to my constituents in Wyre Forest the current advice on how to avoid paid ad spoofing. First, people need to check the website’s URL to ensure that it is their legitimate insurer. Secondly, they should save the phone number on their insurance policy document to their telephone. Thirdly, if people are unsure about who they are speaking to, they should hang up and check their insurance details—caveat emptor.