IT costs honest policy holders nearly £350 million a year and causes an average £50 hike per year in the cost of motor insurance.
INSURANCE fraud is a scourge of the industry and one which experts say is not at all 'victimless,' with every driver paying a price for the crimes of others.
Last week, after a four-and-a-half year investigation by police, the final five criminals involved in a Gwent-based 'crash for cash' scam were convicted.
They were the last of many.
In total, an astounding 81 people were convicted for the parts they played in the scam, which had its headquarters in Pengam, Blackwood, but which extended across the Caerphilly borough and even to Cardiff.
Operation Dino, the Gwent Police investigation which uncovered the fraud, was the biggest operation into insurance fraud that any UK police force has ever undertaken.
Officers trawled through 2,000 hours of CCTV footage and undertook more than 200 of interviews.
The criminals at the centre of the scam were the Yandell family, from Blackwood and New Tredegar, who owned a motor repair garage called Easifix, formerly known as St David’s Crash Repair.
The family staged car accidents at the garage and made a total of 28 claims to 16 different insurance companies – 27 of which were bogus.
Between 2009 and 2011, the Yandells persuaded more and more people, including their family and friends, to take part in the scam – conning insurance companies out of more than £760,000.
They deliberately caused damage to vehicles which they then pretended had been involved in crashes.
In one example, CCTV footage showed a forklift truck being driven directly into a Land Rover.
The fraudsters also removed the air bags from steering wheels to make it seem like the cars had been involved in crashes.
Those convicted have so far been jailed for a total of 60 years and given more than 39 years in suspended sentences. T, although the final batch are due to be sentenced in January.
For the police, Crown Prosecution Service (CPS) and the Insurance Fraud Bureau (IFB), who worked together on the case, last week saw the conclusion of a long campaign to bring the 81 defendants to justice.
The experts involved all say that insurance fraud is not a crime without consequences for the wider public.
Director of the Insurance Fraud Bureau Ben Fletcher said: “Crash for cash scams have a real impact on society, putting the lives of innocent people at risk and costing honest policy holders almost £350 million each year.
“This case sends a powerful message to the public that if you are committing insurance fraud, then the risk of being caught and prosecuted is very real. Fraudsters face the prospect of heavy fines, a criminal record and imprisonment, with potentially restricted access to financial services. The IFB works alongside insurers and police forces up and down the country to detect fraudsters and to bring them to justice.”
Catrin Evans, head of the CPS Wales’ complex casework unit, said it affected the cost of insurance for all drivers.
Ms Evans said: “Fraud of this nature is far from a victimless crime.
“Ultimately, the insurance premiums of all drivers are affected by insurance companies paying out for fraudulent claims.
“Perhaps those involved thought this would be an easy way to make money, but as the 81 convicted have found out, all the agencies involved in the criminal justice system will work tirelessly to ensure that illegal activity does not go unpunished.”
She called the crash for cash operation in South Wales was a “highly-organised, calculated and extensive conspiracy to defraud”.
She said: “The vast majority of cars supposedly involved in these fake accidents were recovered to a single garage that was at the centre of the criminal operation.
“This case has been unprecedented for us in Wales, both in terms of its complexity and the number of defendants involved.
“Over a two-year period, The sheer volume of evidence relating to the charges created many challenges.
“It is testament to the thoroughness and professionalism of the investigation and prosecution teams that 81 people have now been convicted of criminal offences relating to this activity.
“Indeed, more than 70 of those pleaded guilty when the strength of the prosecution case against them became apparent.
“This was achieved through close co-operation between police and prosecution teams, especially at the early planning stages of the police operation.
“Together, their drive, dedication and commitment has brought these fraudsters to justice,” she added.
DCI Richard Williams, a senior investigating officer at Gwent Police, said it is the law-abiding motorists who often picked up the bill for fraudsters.
He said the pre-planned scams cost the industry millions of pounds every year.
DCI Williams said: “We are very pleased with the outcome of this investigation and the sentences passed by the judge reflect the seriousness of the crimes.”
Looking at the recent case based in Gwent, and the millions of pounds which are lost by insurance companies ever year, the picture painted does look a bit gloomy.
But things are looking up.
Last month, the Insurance Fraud Bureau announced a significant drop in crash for cash fraud, with the value of organised scams reducing by almost £60 million in the last three years.
The reduction, the organisation IFB said, is attributable ed to a major crackdown by the IFB in partnership with insurers, regulators and law enforcement agencies.
From next year the IFB has announced it will expand its work into detecting organised fraud into more areas.
Ben Fletcher, director of the IFB, said he knows fraudsters are not ‘product-loyal’ and, now having tightened controls in fighting organised motor fraud, will now increase their attention into other areas, such as property and liability insurance from 2016.
Mr Fletcher said: “It is essential that we increase attention on other product lines simultaneously, to avoid simply shifting the problem of fraud elsewhere.”
Thanks to approval from the Association of British Insurers’ General Insurance Council, the IFB will be able to work in a “ground-breaking” way – working across the industry to identify suspected fraud in policies and claims.
Mihir Pandya, fraud manager at home, car and multi-car insurance company Allianz, said there was still “untapped value in tackling fraud in other product lines”.
Mr Pandya said: “Liability and property insurance, in particular, appear to be fertile ground in terms of fraud networks targeting the claims process, and it’s a natural evolution of the IFB to extend its detection capabilities into these lines of business.”
But despite the widespread problem of insurance fraud, it is clear last week the police, CPS and IFB had cause to celebrate.
Completing the UK’s biggest ever insurance fraud investigation, and seeing the most people arrested and prosecuted in a single crash for cash operation, must have been rewarding for the experts involved.
And for the honest drivers and honest policy makers?
Hopefully, the publicity of a case such as this will deter others from committing similar crimes and will keep insurance costs down. A £50 hike in insurance policy is something to blame thank the fraudsters for – and something we could all do without.
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