Bodyshops can play major fraud role

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Insurance fraud rings operating in "every town and every city" in the UK are using ever more sophist...

Insurance fraud rings operating in "every town and every city" in the UK are using ever more sophisticated methods to avoid detection by authorities, despite advances in anti-fraud technology.

Peter Oakes, a partner in law firm Hill Dickinson's fraud unit, said the motor insurance industry has seen a significant shift from opportunist to organised fraud, with gangs involved in the "wide-scale manipulation of the claims process".

"Those gangs are evolving to become more sophisticated to avoid detection and the regulatory authorities," he commented.

Mr Oakes told the conference that extended networks of organised fraudsters often involving body shops, repairers and claims management companies, are thought to be behind up to 80% of all cases relating to motor fraud seen by his firm.

Staged and contrived accidents are set up and then backed up by numerous other parties who then launder claims, which often pass through genuine credit hire and genuine claimant solicitors to avoid detection.

Mr Oakes appealed for insurers to report dubious accident management activity to the Ministry of Justice's monitoring compliance unit.

He commented: "By dispersing claims they are avoiding regulation through the Compensation Act: if they deal with less than 25 claims a quarter there is no need for them to be regulated but in fact they are dealing with far more but through intermediaries and they are never checked up on."

'Cash for crash' scams - once centred around the North-west of the country - have spread across England through Yorkshire, Birmingham, Luton and now most prominently occur in London, he said.

According to figures released by the Association of British Insurers, fraud currently costs the industry £1.6bn. "How much we don't know about remains to be seen but the trend continues to be upwards," Mr Oakes warned.

However, Mr Oakes added that a change in the public's attitude towards insurance fraudsters is evident from the soaring number of calls from members of the public contacting the cheat line.

The MoJ's regulation of the claims management industry, as well as the success of the monitoring compliance unit based at Staffordshire trading standards, has also had an impact on crime figures.

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