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Motor Insurance Fraud: Key Types and How Technology Can Make Detection More Efficient

Author: Warren​ Coles
Date: September 2020

According to figures from the Association of British Insurers (ABI) for 2020, insurers detected proportionately more motor insurance fraud than in 2019, despite a fall in the overall number of motor insurance claims due to fewer vehicles on the roads during lockdowns. Detected motor frauds fell by 6% to 55,000, while their value fell by only 1% to £602 million. However, detection rates rose by 0.55 percentage points to 2.05% and by value up 1.31 percentage points to 6% (ABI, 2021).

It is not clear if the higher detection rates are due to improved capability on behalf of insurers or because of much higher rates of offending – or both; however, the fact remains of a persistent and significant motor claims fraud problem – the Insurance Fraud Bureau (IFB), indicate false motor vehicle crash claims cost UK insurers £340m every year (Ageas, 2020). Insurers have the difficult task of managing that loss of revenue by potentially pushing up premiums and losing competitiveness or taking a hit to their profitability. In addition, the cost to insurers of fraud is not limited to this lost revenue, but in the extra employees necessary to investigate fraud, and the impact on customer satisfaction – an unfortunate consequence of the need to validate claims is processing for legitimate claims is slowed down and claimants become unhappy with that insurer and don’t renew.

In this blog, we examine the different types of car insurance fraud scams and look at how technology can help with the validation and claims fraud detection process.

Types of Motor Insurance Fraud

False crash claims are just one example of many different forms of motor insurance fraud. Fronting, failing to declare changes in circumstance, failing to declare modifications, vehicle dumping, ghost broking, phantom hire, ‘flash for cash’ and ‘slam on’ fraud are all recognised forms of car insurance fraud (RAC, 2020).

‘Fronting’ occurs when a driver chooses to cut the costs of another driver’s car insurance by declaring themselves as the main driver. Whilst this may initially seem like a good idea, it can result in documentation being sent to the wrong person and it can invalidate insurance and affect the claims stage once a claim is made (Frampton, 2015).

‘Vehicle Dumping’ is where a person will claim that their car was stolen, when in reality the person chose to dump their vehicle and state that it is missing. There isn’t much information available on how much this costs the motor insurance industry. However, if a perpetrator is caught it can result in imprisonment, licence suspension, large fines and community service (City of London News, 2019)

‘Ghost Broking’ occurs when organised crime groups or individuals pose as genuine insurance brokers. They deceive unwitting customers into buying “cheap” motor insurance policies and in most cases simply purchase the insurance through a separate motor vehicle insurance company. However, these companies are not authorised to conduct insurance business and the policy will often be invalid as a result.

If a customer is aware that the insurance is fake at the time they bought the insurance and are caught driving an uninsured vehicle, then the punishment can vary from 6 points on a licence and a £300 fine, right up to the vehicle being seized and crushed (Get Safe Online, 2020; Frost, 2018).

‘Phantom hire’ is a growing form of fraud and it is estimated that phantom hire fraud costs the insurance industry around £60m every year (Action Fraud, 2020). Phantom hire is where criminal gangs set up bogus car hire companies and submit false claims for replacement cars whilst their own vehicle is being “repaired”. In some instances, it has been found that the same vehicle was being “hired” by more than one individual at the same time.

In other cases, it has been found that a car was genuinely hired however, an E Class Mercedes was claimed for when it was really a ford fiesta that was being hired at a cost of £200 less per day (Action Fraud, 2020).

‘Flash for cash’ and ‘slam on’ fraud is a considerable threat to the motor insurance industry. Fraudulent car collision claims increased 45% year-on-year in 2019, compared to an average increase of 27% across all categories of insurance fraud (Fleet News, 2020). Flash for cash is where drivers agree and deliberately crash into another driver’s vehicle. Slam on fraud is where a driver will suddenly brake with the intention of causing a vehicle behind to crash into their vehicle.

How Technology Can Help

As the level and sophistication of fraud increases, the need for technology that can provide efficiencies through automation to help fight fraud increases as a result. Any technology solution designed to provide those efficiencies must be able to do the following things:

  • Automate the investigation process, not simply the onboarding or submission processes.
  • Be capable of aggregating data from across all the disparate data sets you require for a complex investigation in a data agnostic way.
  • Allow you to setup search and risk assessment workflows that can collate data from across third-party, open source and internal data.
  • Present finding in various formats in a transparent way with all sources attributed and able to be presented as evidence.
  • Is flexible and scalable enough to be able to handle different levels of complexity for claims validation and then fraud investigations.

In this article (How Insurers can Utilise Technology to More Efficiently Risk Assess Claims, Discover Fraud, and Improve Customer Satisfaction), we expand more on the details of why the above is so important to deliver efficiencies in the claims validation and claims fraud investigation processes.

We also have a number of case studies with our insurance partners that provide details of how we have helped insurers detect more fraud and create time efficiencies.

If you’d like to know more go to our solutions page or get in touch.

This page was updated on the 14th March, 2022, to add the most up-to-date statistics and insights. 


Horne, B. (2018) Fraudulent claims drive up the cost of car insurance

Ageas Fighting insurance fraud

RAC (2020) Car insurance scams and frauds 

Frampton, C. (2015) What is fronting and why does it affect car insurance 

City of London News (2019) Man sentenced for exaggerating his car’s value and falsely claiming it had been stolen 

Get Safe Online Motor Insurance Fraud (Ghost broking)

Frost, J. (2018) Ghost broking losses cost £631,000 over the last 3 years – IFED 

Action Fraud Hire car fraud is costing motorists and insurers millions each year

Fleet News ‘Crash for cash’ warning as insurance fraud on the rise

Insurance Fraud Bureau Crash for Cash

Cohn, M. (2019) Companies starting to use AI technology to fight fraud

Warren​ Coles
Warren is a growth and digital marketing veteran with over twenty years' experience across SaaS and the wider technology area in general.