MSE News: "Staged accidents" drive up car insurance costs - report

John_Pierpoint

Last weekend's BBC Radio 4 "Moneybox" revealed that the whole cash repair industry is riddled with "corruption"/"kickbacks" from the tow truck driver to the Insurance companies themselves.
The system is set up to milk the motorist not mitigate the losses.
Basically the contact details of the driver with the crumpled rear end is worth up 1,000 GBP - one repair depot claimed that they made more money from "referral" fees than car repairs.
Part of the problem is that the databases allow anyone in the claims business to bypass the car owner, who pays for the circus and stitch up a deal amongst themselves. There is no incentive to minimise these costs, just try to lay them off on some one else.
http://news.bbc.co.uk/1/hi/programmes/moneybox/default.stm

DirectDebacle

If you read the report linked to in post #1 then 'crash for cash' is identified as one reason of many, why premiums are escalating. The police estimate is that for 2009 approx 30000 were of this type. In 2009 there were over 226,000 accidents involving personal injury.

In 2008 the Dft conducted a review of accident data recording and proposed that recording of driver ethnicity be adopted. Refer to page 55 of this PDF document.

http://www.dft.gov.uk/pgr/statistics/committeesusergroups/scras/2008reviewstats19/reviewreport.pdf

The Dft estimated that taking into account other data the true figure was in the region of 680,000 to 920,000 for all accidents.

It would seem that accidents are higher than current data recording would suggest and that there will be very limited, if any, data available that can show that any one ethnic group is more likely to be involved in any particular type of accident than another.

Data on ethnicity recorded at a local level will simply reflect the local conditions and cannot safely be transposed to produce a national statistic.

What is obvious is the scale of RTC on our roads and that the vast majority of these will be due to driver error.

In the article linked in post #1, reference is made to making improvements to driver training. I agree with this but feel that current driver training is now beyond tinkering with.

The current training and testing is totally inadequate and should be scrapped.

In my opinion driver training and testing should be at the minimum level required to pass an IAM/RoPA advanced driver course. Licences should be valid for no more than 10 years and renewed only after a check test has been passed.

In that way RTC and therefore insurance premiums will be significantly reduced.

I would expect that for political and commercial reasons there would be vehement opposition to such a radical proposal. So the carnage and cost of it will continue.

mikey72

DirectDebacle wrote: »

In my opinion driver training and testing should be at the minimum level required to pass an IAM/RoPA advanced driver course. Licences should be valid for no more than 10 years and renewed only after a check test has been passed.

In that way RTC and therefore insurance premiums will be significantly reduced.

I would expect that for political and commercial reasons there would be vehement opposition to such a radical proposal. So the carnage and cost of it will continue.

That and the fact most drivers would fail.
Would be quite funny watching all the 17 year olds who pass first time laughing at all the 30+'s though.

DirectDebacle

mikey72 wrote: »

That and the fact most drivers would fail.
Would be quite funny watching all the 17 year olds who pass first time laughing at all the 30+'s though.

If that were the case, I don't agree that it would necessarily be so, then it would just indicate that there are too many people out there driving who shouldn't be.

Around 43% of drivers pass the test at their first attempt. If standards were raised together with the improved training and extended time it takes to learn additional skills, I would expect this first time pass rate to remain roughly the same.

What would you suggest as a sensible way to reduce insurance costs, which the insurance companies tell us have to be increased because of the escalating costs of claims?

mikey72

DirectDebacle wrote: »

If that were the case, I don't agree that it would necessarily be so, then it would just indicate that there are too many people out there driving who shouldn't be.

Around 43% of drivers pass the test at their first attempt. If standards were raised together with the improved training and extended time it takes to learn additional skills, I would expect this first time pass rate to remain roughly the same.

What would you suggest as a sensible way to reduce insurance costs, which the insurance companies tell us have to be increased because of the escalating costs of claims?

A realistic look at the figures, and some transparency in how the premiums are calculated?

Crash for cash is ten quid a vehicle from the ifb's figures.

43% of drivers are classed as safe to drive?
Even if the test was made more difficult, you think about the same rate?
So how would re-testing older drivers, who the insurers always state are a much better risk, improve the figures by much?
At best you would know they were equally as skilled as a 17 year old.

raskazz

Tucker wrote: »

What areas are lacking? You are deluded if you think the industry is actually attempting to reduce it across the whole industry or for the benefit of wider social problems.

So in order to back up this claim perhaps you could please identify which specific insurers in the industry, in your opinion, are not attempting to reduce fraud?

Tucker wrote: »

By serious fraud prevention measures, I mean investment in tackling the problem for the benefit of the whole industry and us paying customers. Not just to protect its own profit and loss account.

But that is the point. Insurers are not charities so the only incentive to reduce fraud is an economic one.

Tucker wrote: »

Insurers look for instances of fraud for one specific reason - to use it to refuse payment of a claim. That’s not a deterrent it’s moving the problem elsewhere for them to try it on again.

That is manifestly untrue. The whole basis of anti-fraud techniques at the underwriting stage (i.e. what I was banging on about for most of my last post) is that prevention is better than cure - that is not avoiding payment of a claim or moving a problem elsewhere. It is proactive counter-fraud action.

Tucker wrote: »

Fraud prevention is hitting them with the full weight of the law. Something insurers could do off their own esteem instead of expecting the police and the public tax payer to pick up the tab.

That is easy to say but you conveniently ignore the main issue with this - that of cost.

Tucker wrote: »

It does not look to deal with the core of the problem. It does not when it finds straight forward prosecutable offence bring them in to the judicial system. Don’t tell that’s the police’s problem, because it takes nothing but some investment in a criminal investigator and a lawyer with criminal experience to bring a case itself. IT HAS ample resources, but it won’t spend them. Simply because it has no will to actually tackle that aspect of it, because it costs money and its sole interest is to knock the claims on the head.

So do you actually have any relevant cost/benefit analysis to verify that this would be an economic avenue for insurers to pursue?

Tucker wrote: »

You mention underwriting fraud. Not difficult to prove. Not difficulty to deal with as a criminal offence.

It’s a straightforward offence under the Fraud Act 2006

Fraud by false representation
E+W+N.I.
(1)A person is in breach of this section if he—
(a)dishonestly makes a false representation, and
(b)intends, by making the representation—
(i)to make a gain for himself or another, or
(ii)to cause loss to another or to expose another to a risk of loss.
(2)A representation is false if—
(a)it is untrue or misleading, and
(b)the person making it knows that it is, or might be, untrue or misleading.

Any one who intentionally gives false information on a proposal form for the sole purpose of gaining cover when they would otherwise be refused of to obtain a reduced premium is committing this offence. Very easy to deal with.

Very easy to deal with? Again, 'ease' is a subjective word and you have provided no evidence that this would be a cost-effective avenue to pursue.

Tucker wrote: »

How many instances will there be of proposers making false statements at inception of a policy? Tens of thousands per annum?

Exactly - which is why insurers are investing in counter fraud technology at the underwriting stage as prevention is better than cure.

Tucker wrote: »

How on earth do you think the industry is going to deter people from making false representations if there’s no penalty to pay for trying it on? Nothing ventured nothing gained is what people start to think because there’s no punishment for doing it.

There is a penalty. You will tend to find that those who have policies voided for non-disclosure struggle to find cover at competitive rates in the mainstream market due to technologies such as Hunter.

Tucker wrote: »

I may well be out of the industry, but its core business doesn’t change – profits. Just look at the banking industry for confirmation that the financial sector does not care not one jot about anything but it’s own wellbeing.

So are you implying that insurers should act as charities and indulge in counter-fraud measures which bring them either no benefit or produce a loss?

Tucker wrote: »

You may be passionate about the insurance market and I suspect that clouds your view.

My view is not 'clouded'. I suspect that yours is clouded by the mists of time.

Tucker

Charities?? What the hell are you talking about? I'm not suggesting they do it for charitable reasons, I am saying the need to do it clean up it's OWN mess.

You can happily live in your little bubble and believe insurers can do no more than they are. They are obviously dealing with fraud perfectly as it stands because you say so....... Clearly MP's and the Transport Select Committee don't agree, because they don't think you are doing nearly enough. Oh and guess what, they are expecting you to fund it.... What a shame!

"MPs have called on car insurance firms to do more to prevent fraudulent claims and so bring down the cost of premiums .

The House of Commons' cross party transport committee has released a new report identifying rising cases of fraud as one of the main drivers of increasing car insurance costs .

It is calling on the insurance industry to help tackle the problem by funding a dedicated police unit to target fraudsters.

Paid for by insurers...... Insurers need to do more!


Which aren't doing enough - all of them! Not just my view either.


You carry on thinking all is well in the insurance world by all means and then watch as you get forced to act, fund and deal with it via legislation.