By CRAIG THOMAS
The figures from 2014 show that there were more than 212,000 dishonest insurance applications for car insurance, an increase of 18% on the previous year.
Fraudulent applicants frequently ‘forget’ to disclose previous claims or unspent convictions, or provide a false address or postcode in order to claim to live in a lower-risk neighbourhood.
Another reason is a practice called fronting – where parents insure a vehicle in their name when it is mainly driven by a son or daughter.
The ABI also uncovered a number of scams known as ‘ghost broking’, which involve illegal insurance advisors selling fake car insurance policies.
These result in motorists driving around thinking that they’re insured, but in reality they face prosecution for driving without valid insurance, which can also mean having their vehicle seized and crushed.
Ghost brokers often operate using websites, and in pubs, clubs, car parks and university campuses.
Recent examples include a fake insurance adviser who was jailed for two years after making £65,000 selling fake car insurance; a con man who sold worthless car insurance to Manchester students and was jailed for three years; and an ‘adviser’ who sold over 100 fake policies to drivers in west Yorkshire and was jailed for a year.
In addition, one fake broker already serving a jail sentence was recently ordered to repay over £600,000 to 600 drivers he sold fake cover to, or face further time in jail.
The Insurance Fraud Bureau (IFB), which manages large-scale cases, is currently dealing with 26 cases of ghost broking fraud.
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.”