cash for crash scam exposed

[mr2mk1g 10]

Received an interesting judgment yesterday called Locke v Stuart.

Very long story short, an "accident management company" seems to have been organising a bunch of mates in the Birkenhead area to go round and have crashes with one another in order to claim from each others insurance policies. A lot of evidence was actually gathered from Facebook to show links between 106 occupants of vehicles involved in 9 accidents (yes, the cars were always packed to the gunnels and were sometimes a mini bus). Several of the individuals were involved in multiple accidents.

A telling section from the full judgment is:
A pattern whereby the “guilty vehicle” has recently been taken on short term hire. It is then involved in an accident which is clearly 100% its fault. In the present case, the “guilty vehicle” was hired by James Stuart at about noon on the day of the accident and was due for return on 9th December. He had paid an additional premium for collision damage waiver so that he was not liable to pay anything in the event of a crash. The total cost was very modest. Mr. Higgins put it graphically as a means of turning £50 into £50,000. This involves assumptions about the numbers involved in the accidents and the size of their claims. One of those assumptions is that no claim is likely to be of such a size that it justifies substantial investigation. It appears to be a happy fact, if true, that no-one was seriously injured in any of these accidents. The total cost to the insurers of meeting these claims, and the costs of the solicitors (on Conditional Fee Agreements with success fees) would be very substantial indeed.

iii) At the time of the accident both it and the other “innocent vehicle” should be full of people. Accident A involved a total of 20 people between the two vehicles, Accident B 9, Accident C 11, Accident D 10, Accident E 13, Accident F 10, Accident G 10, Accident H 11, and Accident I 8. This is a total of 106 people, of whom 9 were “guilty drivers”, leaving 97 claimants worth a total of £40,500 in referral fees at £450 each. The overheads would be limited to the cost of short term hire of the guilty vehicle. This selection of claims contains two where the guilty vehicle was insured by Equity Red Star and 7 where it was insured by the Second Defendant. If the allegations are well founded, it is likely that there were other claims addressed to other insurers which I have not been told about. The size of the alleged fraud is very considerable. Mr. Smith told me in evidence that the cost of motor insurance fraud was estimated at £2 billion a year which he thought was probably an underestimate. This fraud was a small part (but not an insignificant part) of a much larger problem.

This exposes the problem behind referral fees as the accident management company itself only needs to sell the claimant's details to the claimant solicitors to make a massive profit. It doesn't matter if the claims eventually fail or if they're completely fraudulent, they still get their wad. This is a massive incentive for people in the industry to push through dodgy claims.

The other problem is that "accident management companies" are virtually completely unregulated. I'm sure you'll all have seen those funny looking shops on run down high streets with "Compensation Recovery Service" or something written on the sign. No, they're not lawyers. They're probably (sweeping generalisation) recent immigrants. They're often complete shysters.

The system needs to be shut down. Luckily, the govt is looking at doing just that - kill referral fees dead. Lord Jackson reported on the problem last year and the govt is just working through the final stages of a consultation process to get a new set of laws drafted. This will mean the end of conditional fee arrangements, meaning that a dodgy claimant can be left holding the can when their claim falls apart because its become obvious to all that they're just a lying scumbag.

[Skyrad 0]

Glad they caught them, insurance premiums are already sky high God knows how the under 25s can afford to drive at all. I wonder how many other gangs are carrying out this type of crime. If this continues unabated I wonder how long it will be before hire companies refuse to allow complete insurance cover on hire vehicles.

When an author is too meticulous about his style, you may presume that his mind is frivolous and his content flimsy.
Lucius Annaeus Seneca

[mr2mk1g 10]

It's very prevalent and increasing significantly for a number of reasons. One is the financial downturn. Another is Eastern European gangs moving across from the drugs trade in their own country to organised insurance in this country. It's more lucrative and far less dangerous. Some of the people involved are seriously nasty. The above case centred around 2 people who made half a million out of referral fees on the above cases alone then disappeared. Links to Spain, but beyond that few really know. It costs us all something like the first £60 of our motor insurance premium and the industry as a whole £2 billion a year.

[Skyrad 0]

Thats pretty shocking, very big business then.

When an author is too meticulous about his style, you may presume that his mind is frivolous and his content flimsy.
Lucius Annaeus Seneca