Criminal gangs believed to have defrauded insurers at least £250,000

Seventeen people have been arrested in coordinated raids across England this morning for their suspected involvement in credit hire fraud rings.

Some 100 officers took part in the raids, coordinated by the City of London Police unit, and attended by Insurance Times.

Warrants were executed at residential and businesses addresses including accident management companies, vehicle damage assessment firms, and repair centres.

The arrests follow a four-month investigation by the Insurance Fraud Enforcement Department (IFED) into criminal gangs suspected of defrauding insurers £250,000 by making false insurance claims for courtesy cars provided to motorists while their own vehicle is being fixed.

This morning’s crackdown is thought to be the first time an IFED investigation into credit hire fraud has led to arrests.

IFED detective chief inspector DCI Dave Wood told Insurance Times: “We’ve been aware that credit hire is an issue for the industry but we haven’t received many referrals around it, which has led us to do our own self-generated operation.

“It’s a little bit like ghost broking where we knew it was there but no one knew how big it was.

“Hopefully we’ll be able to recover some of the assets back to the industry. That’s one of the aims of this operation.”

Wood said that while insurers were the criminals’ intended victims, innocent motorists ultimately pay the price in terms of the impact of insurance fraud on the cost of premiums.

Transport Select Committee chair Louise Ellman MP, who was present when warrants were executed in London, told Insurance Times: “[IFED] was a specialist unit that we recommended be set up, so it’s very gratifying to see the results directly.

“We’ve been concerned about the rising costs of insurance premiums and fraud is one of those areas causing it and credit hire fraud is a significant part of it.

“I applaud the Insurance Fraud Enforcement Department which does vital work in rooting out insurance fraud. In the short time since it was set up, it has delivered real achievements that will benefit all law-abiding motorists.”

Criminal gangs typically set up phoney, or use corrupt, claims management and hire companies to commit this type of insurance fraud, known by industry as ‘credit hire fraud’.

Through these businesses the fraudsters will invoice insurers for a courtesy car they have not actually provided, commonly called ‘phantom hire’.

In other instances they will ‘lease’ the same courtesy car to different motorists at the same time and put in a separate claim for each fictional hire, often known as ‘cross hire’.

Sometimes they may also bill an insurer for providing a top spec courtesy car when only a basic model was given.

Hire periods are also often exaggerated.