Midlands is hotspot for car insurance fraud, followed by Manchester, East London, Liverpool and Bradford

A new study published by specialist law firm Keoghs shows how motor insurance fraud is affecting more of England’s most densely populated areas than ever before.

Keoghs 2010 Motor Fraud Index builds upon similar studies published in 2008 and 2009 and highlights not only the areas of the UK where the highest numbers of suspicious motor claims are made, but also how the fraud ‘plague’ has spread in recent years.

James Heath, head of counter fraud strategy at Keoghs, commented: “The results clearly show that ‘crash for cash’ fraud now affects all of the most heavily populated regions of England and Wales. Across the board, every major town and city has seen an increase in the number of suspicious claimants.

“When the insurance industry first started investigating insurance fraud over a decade ago the problem was associated with a few areas in the north west of England. The new study shows emphatically that this is no longer the case.”

All of the ten worst affected areas - and 17 out of the top 20 - are located within the conurbations of Greater London, the West Midlands, Greater Manchester, West Yorkshire and Merseyside.

The worst affected is Birmingham, followed by Manchester, East London, Liverpool, Bradford, Oldham, Blackburn, North London, Bolton and Leeds.

The most common form of motor fraud is a staged accident (‘crash-for-cash’), which typically involves a car breaking heavily and unexpectedly at a junction to cause the vehicle behind to crash into it. Claims are then filed – often for tens of thousands of pounds – for both damage to the car and injuries to the driver and passengers.

Suspicious claims handled by Keoghs – whose client base accounts for over two thirds of the UK motor insurance market – substantially increased in 2009, due to a number of factors.

Heath explains: “The insurance industry is improving fraud detection processes all the time, and as such new scams are uncovered on a daily basis. These include acts of organised fraud by criminal gangs – involving substantial numbers of suspicious claimants. The recent economic environment has also had a direct impact on the number of suspect claims being presented and subsequently identified.

“With the ABI highlighting that £1.9bn of insurance fraud probably went undetected in 2009, the industry needs to continue to develop its counter-fraud capabilities. There is no doubt that fraudsters are becoming increasingly sophisticated in devising new ways of perpetrating fraud and avoiding detection.”