The Cost of Car Insurance Fraud

In his Autumn Statement 2015, Chancellor of the Exchequer George Osborne promised to reduce car insurance premiums by £1 billion, or up to £50 per premium, on average, by doing away with claimants’ rights to cash compensation for minor injuries, such as whiplash. According to Aviva, the largest insurer in Britain, 80% of motor injury claims include whiplash, compared with just 3% in France, costing the insurance industry up to £2 billion a year.

Genuine claimants will still receive compensation, but in the form of practical medical care, rather than cash. According to the AA, 11% of motorists believe that making a false or exaggerated claim for personal injury is legitimate in the event of a road traffic collision caused by a third party and Aviva apparently has over 16,000 such claims under investigation. Car insurance fraud is not, as many motorists seem to think, a victimless crime and law abiding motorists are the ones who bear the cost of false or inflated claims.

Mr. Osborne delivered his Autumn Statement shortly before another five people, all members of the same Welsh family, were found guilty of making six false insurance claims, worth £144,000, between 2009 and 2011. Their sentencing, to between two and six years apiece in jail, took the total number of convictions resulting from the largest ever investigation into car insurance fraud in Britain to 81.

The Yandell family perpetrated the scam from a garage in Pengam, Blackwood, but were caught when their own CCTV showed a Land Rover deliberately being driven into a fork lift truck to simulate accident damage. All in all, the fraud ring involved 57 cars, 28 separate insurance claims and cost the insurance industry over £750,000.

Older drivers will surely be grateful for anything that the Chancellor can reduce the cost of car insurance premiums, having borne the brunt of the increase in Insurance Premium Tax (IPT) on November 1. Officially, IPT increased from 6% to 9.5%, but motorists in the over-50 category have seen their insurance costs increase by 16.4%, on average, compared with just 1.5% for younger drivers, according to the Consumer Intelligence Motor Insurance Index.

Here at City Insurance we’re happy to say that we will be passing on all the savings of this latest initiative to you in the form of lower premiums.