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Phantom crash gangs cheat car insurers

Criminal gangs are responsible for an increase in staged car crashes that are costing insurance companies millions of pounds each year.

The scams are easy to carry out — fake witnesses and passengers are often hired to make them appear realistic — and the police rarely catch or prosecute the criminals involved.

James Heath, a partner at Keoghs, solicitors, has been involved in a 12-month investigation into a phantom car crash ring that is estimated to have cost insurers £10 million.

Heath said: “If you are a punter on the street, you go to a local Mr Big and pay £500. He will have an army of drivers who will take the car and set up an accident, typically at a roundabout, involving an innocent member of the public.

“A stooge driver will use the punter’s identity documents to impersonate him. The punter will then make an insurance claim. The Mr Big also owns a medical legal agency which provides a fake medical report for a whiplash claim as well.”

Heath said that the average payout on a staged accident was £3,000, often with a £2,500 claim for whiplash damage.

In another variation, a fake car crash can be staged for less than £2,000. Two drivable cars can be bought to stage a crash for £1,000. For an extra £800 a customer can buy £500 of comprehensive insurance, and another £300 of third party cover.

After a fake crash has been staged all participants can claim £2,500 for whiplash injury and £5,000 for the written-off cars, fake car hire and loss of earnings. This can leave fraudsters reaping the benefits of a £26,000 claim.

Convictions for this kind of fraud are rare, Heath said. A London-based fraudster was convicted for conspiracy to defraud in 2004 and in 2001 a gang of six were jailed for their part in a £150,000 car insurance fraud. In 1999 nine people were jailed for a scam that amounted to £3 million.

The scam is most prevalent in the north west but has also been reported in west Yorkshire. The Insurance Fraud Bureau, a group of expert analysts employed by the insurance industry, estimates it costs insurers between £48 million and £200 million a year.

Chris Hill, head of fraud at Norwich Union, said criminal gangs could make easy money from phantom car crashes because police authorities had little time to investigate them. “If something is highly profitable and the chances of getting caught are zero it is going to be exploited,” he said.

(Source: The Times)

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