Crash-for-cash Insurance Fraud

Siobhain McDonagh Excerpts

Wednesday 22nd May 2024 Westminster Hall

[Dame Siobhain McDonagh (Mitcham and Morden) (Lab)]

It is a pleasure to serve under your chairmanship, Ms Fovargue. I thank the hon. Member for Carshalton and Wallington (Elliot Colburn) for securing this debate about crash-for-cash scams. South-west London has been a target for organised crime gangs seeking to scam constituents in both of our patches, so this is a much-needed debate. The more attention we give the issue, the less likely our constituents are to be the victims of an insurance fraud.

I will start by declaring an interest: in retrospect, I understand that I have been the victim of a crash-for-cash incident. About eight months ago, I was driving through Tooting on a residential road when a moped came out of nowhere, overtook me and stopped right in front of me. I was not travelling very fast—it was a residential road—so I did an emergency stop and managed to avoid hitting the moped.

Immediately, the driver dropped the moped and began to shout and point at me. I pulled over to see that he was okay, but I was absolutely confused because I knew I had done no damage to his moped and that he too was not hurt in any way. I just did not understand what was going on. He dragged me over, took my details and took photographs of me, of my car, which showed no signs of damage, and of his moped. I gathered myself to take pictures of his moped and watched him drive off on it, and I thought no more of the incident. Then, some time later, I received a letter from a solicitor demanding large amounts of money because of the need for the driver to use a replacement vehicle.

Not until a constituent came to my advice surgery and went on to describe exactly the same sort of case did I really understand what had happened, and I feel pretty stupid now. My constituent, Ms T, told me that she had spotted a stationary moped on a residential road. Then, when she turned to exit a junction, the moped sped up and lightly tapped her car. The driver then threw his bike to the floor and started shouting at her. He immediately took photographs of Ms T’s car, but he fled the scene before she could take down any of his details. Lo and behold, she was then contacted by her insurers, who let her know that the driver had made a claim. Only then did I realise that both my constituent and I were among the 170,000 people targeted every year by organised crime gangs as part of crash-for-cash scams.

Since then, I have met representatives of Allianz and LV= insurers—not my own, I hasten to add—and learned that crash for cash is a slick operation that targets women: specifically women on the school run, as the hon. Member for Carshalton and Wallington said, because the gangs feel that they are less likely to put up a fight. That was the experience of Ms T, who was driving near a school at 10 am when the incident happened, and it is the experience of four in 10 people who fall victim to this. There also seem to be hotspots, with criminals targeting the outskirts of major cities and, specifically in south-west London, Thornton Heath, which, although it is part of Croydon, abuts my own constituency.

The scam is valued at about £392 million a year. It is big business that is only getting bigger—Allianz has reported that the crime has increased by 25%. What can we do about it? The first thing is the Government’s fraud strategy. The crash-for-cash scam is not even mentioned in that document, but if we are serious about our plan to stop fraud at source and pursue those responsible, that would be a sensible first step.

The next step is the job of the insurance industry: we need insurers to do a thorough job of investigating opportunistic insurance fraud and to let constituents know that they may have been a victim. In my own case, when I gathered myself and realised what had happened, I sent my insurers photographs and the short video. I said that I thought that I had been the victim of a scam. They wrote back to say that I would need to go to court and there was only a 50:50 chance of my being successful.

Finally, we need much more public awareness so that potential victims know how to look out for the scammers. If drivers know the signs of an unfazed driver with pre-written insurance information, they can let the police know and stop this at source. It might seem like a trivial issue, but it is a business worth £392 million a year and all our constituents will be better off if we can stamp it out. It is not a victimless crime. All of us trying to reinsure our cars know how much car insurance premiums are increasing. We must ensure that the law-abiding drivers of this country are not victims of higher premiums because of opportunistic organised crime.