Cutting corners to get cheaper motor insurance backfiring on thousands of motorists, warns the ABI
By Kyle Lindsay
Friday, August 14, 2015 - 09:00
Thousands of motorists are paying a high price, in some cases driving illegally, by cutting corners when buying motor insurance according to latest figures out today from the ABI (Association of British Insurers).
ABI research shows that in 2014 insurers uncovered 212,000 attempted dishonest applications for motor insurance, up 18% on 2013 and equivalent to just over 4,000 every week.
Common lies exposed include ‘forgetting’ to disclose previous claims or unspent convictions when asked, giving a false address or post code for a lower risk area, and parents insuring in their name a vehicle being mainly driven by their son or daughter (commonly known as ‘fronting’). Last year over 1,500 reports to the Insurance Fraud Bureau’s ‘Cheatline’ related to motor insurance application fraud- nearly a quarter of the total calls received.
The ABI also warns against ‘ghost broking’ scams. These involve illegal insurance advisers selling bogus motor insurance policies, that result in the innocent motorist driving illegally without valid motor insurance, facing prosecution and having their vehicle seized and crushed. Ghost brokers may operate through professional looking websites, and in pubs, clubs, car parks and university campuses.
An illegal insurance adviser who made £65,000 selling fake car insurance was jailed for two years. Another con man, who sold worthless car insurance to Manchester students, was jailed for three years, while an illegal adviser who sold fake motor insurance to over 100 drivers in west Yorkshire was jailed for a year. And an illegal adviser already serving a jail sentence was recently ordered by the Central Criminal Court to repay over £600,000 to the 600 drivers he sold fake cover to or face further time in jail.
The Insurance Fraud Bureau (IFB), who manage cross-industry, large scale ghost broker investigations, is currently dealing with 26 cases of ghost broking fraud.
ABI’s advice to help motorists get the best value and legal motor insurance deal:
- Shop around. Motor insurance is a very competitive market, with insurers, comparison websites, insurance brokers all offering competitive deals that will ensure you get the right policy and the best price.
- Lower your risk. The following can all help cut the cost of cover: have an approved immobiliser fitted, keep the vehicle garaged/on a driveway overnight, have a telematics-based pay as you drive policy.
- Opt for a higher voluntary policy excess. The higher the amount of any claim you pay yourself, the lower the premium.
- Buy your insurance from a reputable source and avoid policies sold on social media networking websites, pubs, clubs and newsagents. You can check if your policy is on the Motor Insurers’ Bureau’s Motor Insurance Database (www.askmid.com), which holds details of all vehicles insured in the UK, and check on the Financial Services Register (www.fca.org.uk/register) that the insurer or broker is authorised.
Mark Allen, the ABI’s Fraud and Financial Crime Manager, said:
“Insurers recognise that innocent mistakes and oversights happen. But anyone lying to get cheaper motor insurance, or tempted by cheap insurance offers without first checking that they are genuine, risks driving illegally. The consequences include getting a criminal record and a massive financial headache if found to be at fault for a crash. The risks are just not worth it – especially when you can shop around for the right policy at the lowest price.
”Industry initiatives, such as the Insurance Fraud Register, MyLicence that allows insurers to check for any motoring offences, and the work of the Insurance Fraud Bureau and the Insurance Fraud Enforcement Department in tackling ghost brokers are helping to reduce the scope for insurance application fraud.”