One of the largest ‘cash for crash’ scams in the UK has been smashed by police a s a total of 60 people were convicted in court in Newcastle. In fact, the scam was so large that drivers in the area of Derwentside, County Durham, where the main players behind the scam were based, were finding themselves having to pay upwards of £100 extra for their car insurance.
The convictions were a result of a major investigation, codenamed Operation Nacho, as police investigated local organised crime, mainly involving the activities of members of the Wright family, from Burnhope.
Aided and abetted by the Insurance Fraud Bureau (IFB) and other agencies, 1,800 accidents handled by two particular firms were looked at, and immediately 261 were identified as suspicious, ranging from entirely fictitious to exaggerated and staged.
Of this 261, 25 accidents were identified as having the highest impact on the public in terms of suspected organised crime involvement, and in terms of money as they had netted more than £514,000 with an estimated total cost of around £3m.
Of the 60 convicted, 7 were from the Wright family, including the alleged ringleader Paul ‘Jonty’ Wright, who a recovery, storage and vehicle hire business called PJ Autos. He was found guilty of making false claims for storing damaged cars and hiring out replacement vehicles at up to £200 a day.
Head of the family, his older brother Alan, 49, had been jailed for four years after a trial last year, and was fund in this case to have had four fake crashes within just ten months.
And another family member, who also claimed whiplash in a set-up car crash, had actually bought an Audi with 112,000 miles on the clock, staged an accident in it near his home in Burnhope, and made a claim after apparently writing it off, quoting the mileage as 37,000 – increasing its value.
"We didn't just come across this activity. It was as a result of our communities telling us that organised crime groups were making their lives difficult," said Chief Supt Rob Coulson. “We acted on their information and used intelligence-led policing to take appropriate action as part of a larger operation against organised crime.
"This fraud is affecting every honest law-abiding car insurance holder. It's not just a local issue. We believe this to be a nationwide issue which needs to be tackled robustly.”
Ben Fletcher, Director of the Insurance Fraud Bureau (IFB), said: "This was part of a major joint investigation by Durham Police and the IFB into an organised scam which could have cost the insurance industry millions of pounds. Convictions send a clear message - insurance fraud is not a victimless crime, and the industry, police and justice system will vigorously pursue convictions against those involved.
"Insurance fraud, particularly the crash for cash phenomenon, is anti-social. The criminal gangs organising these scams use the proceeds of insurance fraud to fund other forms of serious crime. By locking the perpetrators up, we minimise genuine threats to our society."
It is estimated that ‘cash for crash’ claims add around £60 to an annual premium for car insurance in the UK.
That's according to David Hindmarsh, Detective Inspector in charge of the Metropolitan Police's Operation Catcher, a 10-strong team responsible for investigating car insurance fraud throughout London.
"The most concerning form of crash for cash scam is the induced collision," he said. "The criminal gang will go out with two cars; one is a decoy and the other is a stooge car [often an aging premium vehicle of little value]. The decoy car will brake hard and pull to the left at the last minute, giving the stooge car an apparent reason to brake. The stooge car will over exaggerate its braking so that the person behind runs into the back of it."
The current law, and present civil liability regulations say that the driver of a car that hits the back of another is at fault, meaning that any claim is made (in the case of fraudulent claims) on the innocent victim's insurance.
"This is where the fraud begins," said Hindmarsh. "The organised gang will have set up an accident management company to handle the incident. This company will have a sister car hire company, which doesn't actually own any hire cars. However, they'll bill the third party's insurance for a like-for-like replacement, which may be a high-end Mercedes, for example, costing up to £250 per day. If a claim lasts for three or four months, a hefty bill soon mounts."
With no legitimate accident management company, and no actual hire/replacement car, money simply falls conveniently into the gang’s pockets straight from the victim’s insurance company. And then there are the false recovery and storage fees, solicitor referral fees, personal injury claims…
The police are fully aware that these gangs exist and are trying to crack down on them. The Asset Protection Unit Ltd (APU) work closely with David Hindmarsh's Operation Catcher, and together Hindmarsh believes that more convictions will follow as police get more and more aware of the scam.
"The message is starting to get out there. I would urge the public to take pictures of the damage to both cars if they are involved in a crash; we've seen that gangs will cause further damage if it isn't sufficient. Also take photos of the driver and all occupants, if you can do so without putting yourself at risk, and look out for CCTV cameras and independent witnesses.
"It's only a matter of time before every single police force has a dedicated team to tackle crash for cash scams."