Fraudulent claims are costing transport operators millions of pounds in inflated insurance premiums, so what are the insurance companies doing to combat the problem?

The problem of fraud and its impact on motor insurance premiums was highlighted recently by Robert Flello MP, chair of Parliament’s Freight Transport Group, who has called on the government to limit the maximum value of damages for whiplash in a bid to curb fraudulent and inflated compensation claims.

Flello points out that the insurance industry deals with 750,000 whiplash claims a year while the Association of British Insurers estimates that fraud adds, on average, an extra £50 to the annual insurance bill for every UK policyholder.

“Fake and exaggerated claimants effectively steal from the rest of us by forcing our premiums up to pay for their misdeeds,” says Flello. “It’s important government ensures that people suffering genuine injury are still protected, but any move to confound the scammers has to be applauded.”

But Norrelle King, branch director of the Glasgow office of insurance broker GS Group (pictured), argues that the insurance industry is already taking steps to combat fraud. King got in touch after reading a leader in Motor Transport accusing insurance companies of not doing enough to combat the problem, and simply passing the cost onto operators in higher premiums.

“The insurance industry doesn't portray itself particularly well,” King concedes. “The purpose of an insurance broker or an insurance company ultimately is to make sure that the business can survive a major incident, whatever that might be. That could be a fire, a motor accident or a death. Our purpose is to ensure that the business can continue.

“The insurance industry does recognise that people are aware now that there are unpleasant things happening with insurance premiums. I would say that we accept as an industry that we've got a duty to customers, to identify and pursue fraudsters, wherever we can.”


Although the problem of fraudulent claims has been around for many years it has been made worse by what King calls a “culture of entitlement”.

“So many people out there who are normally law abiding individuals start to fabricate and exaggerate claims, because they can see that there's money in it,” she says.

“There's an unscrupulous element of the legal profession that’s exploiting the legal system. The problem is that maybe 10 years ago fraudulent claims for personal injury were around £1,000 or £2,000 and it was felt it was easier to pay that claim than to have a legal fight about it.

“The real trip up by the insurance industry is that £1,000 now very quickly becomes a £30,000 legal expenses claim, because the solicitor drags it out and charges for his time.”

Insurance companies and brokers are now however much more prepared to take on the fraudsters. Completely fraudulent claims – crash for cash – come into the same category of fraud as over-inflated claims that may be based on genuine incidents.

“In the last five years, the insurance industry has said, ‘hold on a minute, this gravy train is way out of control and we need to do something about it’,” King says. “Some of the national brokers no longer really have a claims department but independent brokers such as the company I work for still maintain a proper claims service.

“Brokers don't tend to be involved in the fraud side of things, but we understand how claims can be exaggerated and we need to educate our clients about what they can to do to counter that.”

Report promptly

The first thing operators need to do is encourage drivers to report accidents promptly to prevent claims being inflated.

“The most common thing that happens is that I run into the back of you, and we exchange details. I go away and I possibly don't tell my insurance today because I'm really busy, and it was only a minor bump anyway, so I'll get around to it tomorrow or whenever. In the meantime, a claims management company somehow gets hold of your contact details and says, ‘you had a bump. We'll get you a replacement car right now and get you some physiotherapy and a solicitor to pursue the claim’.”

“The claims management company then delivers you a hire car at £1,000 a week. You get that car for three weeks because they're manipulating the repair of your car to make sure that it's off the road for three weeks.”

Experience has shown that it can take an average of 23 days for an HGV driver to complete and submit the form notifying the transport manager of an accident.

“Very often, they hear about the claim from the third party before they hear about it from their driver,” King says. “Those 23 days are the days that a claims management company can work their way in. If it’s £1,000 a week, that's a potentially higher cost immediately.

“The claims management company's perspective is, ‘the longer we can string this out, the more money we can make out of it.’ They've no interest in negotiating a cheap price for your repair or the best hire car price for you. All they care about is racking up the cost because the third-party insurer is going to pay it. They've got an open chequebook.”

Whiplash capital

King says the UK “had earned the reputation of being the whiplash capital of Europe”, with personal injury claims helping to drive up premiums by 10% in 2016. But she says that the chequebook is no longer as open as it once was.

“We are now in a completely different place to where we were a few years ago, and insurance companies have become a little bit more savvy,” she says. “They will have a claims validation team, and within that there will be people who are qualified counter-fraud personnel to look at the whiplash, the car hire and the inflated cost of repairing the car.”

King cites one major insurance company, Aviva, which in 2014 defended just 200 claims at trial. In 2015, it was over 1,500. “You can see the volume of cases that they've decided they are not accepting has hugely changed,” she says. “Aviva says that they have a 70% success rate at these trials and in 2015, the denied claims value was £36.9 million from organised crash for cash claims.”

As well as reporting accidents quickly, King also advises operators to fit forward facing in-cab cameras as they can often provide excellent evidence of fake or inflated claims.

“As a broker, if we get evidence sent to us to support the denial of a claim, we will take that immediately to the third party,” she says. “It can sometimes just stop the claim there and then and it doesn't even proceed to a notification to the insurance company.”

Gather information

The third action fleet managers can do to help defend fraudulent claims is to ensure their driver collects as much information from the scene of the accident as possible. To help guide drivers through what can be a very stressful experience GS Group has developed a mobile phone app giving the driver a step-by-step guide to gathering the essential facts.

“The app will walk you through what you need to do at the scene of an accident in order to protect yourself,” she says. “Many drivers believe all they have to do is swap names and walk away. No, you don't. You actually need to do things like take photographs. Look at the road conditions. What were the speed limits? Are there any skid marks on the road?

“Who was in the other vehicle, one person or four? Because it's your word against mine and if I say, ‘it was me and my three kids in the car,’ and you say, ‘no, there was only you in the car’ how do you prove I'm lying? You do it by taking a picture. You take pictures of the damage of the car that you supposedly hit, all the way around it, and the damage on your vehicle.

King says that capturing that sort of information quickly is the most important part in cutting down on claims costs. And that can directly translate into lower premiums.

“If insurers start to see the cost of your claims, compared to other hauliers coming down you're going to get better rates from the insurance company,” she says. “That's going to result in the premiums coming down.”