The insurance industry is complex and involves millions of pounds changing hands every day. But where there are such large volumes of money, there’s also the opportunity for fraud.


History tells us that during times of economic downturn, people look for other sources of income. During these times, fraud of all types nearly always increases. But insurance criminals are an opportunistic bunch, continually looking for new ways to make a quick buck.


According to data from the Association of British Insurers (ABI), 107,000 fraudulent insurance claims worth £1.2 billion were uncovered by insurers in 2019. Of those, 58,000 related to motor insurance.


That’s equivalent to a new fraudulent claim being discovered every five minutes. Or, to put it another way, nearly 300 insurance fraud cases and around 2,000 dishonest applications (totalling £3.3 million) being detected every day.


Whatever way you look at it, that’s a lot of fraud that insurance companies need to watch out for. And the more time insurance companies spend dealing with fraud, the more likely premiums will rise.


Something needs to be done and a good place to start is for drivers to educate themselves about insurance fraud. In this article we look at what insurance fraud entails, unpick the different types of insurance scams and myths out there, and discuss what taxi drivers can do to protect themselves.


What is vehicle insurance fraud?


Insurance fraud is essentially when someone withholds information from their insurer. This could be anything from not giving your correct age to lying about previous convictions or lying about what happened in a road traffic accident.


In some cases, not passing on this information may be an oversight. However, whether it was intentional or not, withholding any information like this could invalidate your car or taxi car insurance policy – leaving you and your business vulnerable to financial implications in the event of an accident.


Vehicle insurance fraud can be carried out by individuals or companies working in the automotive industry. But it can also be committed against them.


Car insurance fraud can range from someone staging a car crash in order to benefit from the resulting claim to someone deliberately hiding penalty points from their insurance company.


However, whatever form the vehicle insurance fraud takes, it is still classed as fraud and can come with high penalties.


Common types of car insurance fraud to watch out for


Car insurance fraud is varied, but there are some scams that happen frequently. Here’s a rundown of some of the most common types of car insurance fraud and scams.


1. Vehicle modifications


If you buy a vehicle that has been modified, or are making modifications yourself to your taxi, you need to let your insurance provider know as this may affect your premium. Some modifications might bring down the premium (e.g. safety or security features). However, some might cause your premium to go up (e.g. performance- or value-enhancing modifications).


2. Crash for cash


The practice of deliberately crashing into another vehicle as a way to make an insurance claim is known as ‘crash for cash’. Unsuspecting motorists are targeted by fraudsters so that false insurance claims can be made.

According to the IFB, thecrash for cash’ phenomenon costs the industry £392 million every year. The IFB’s latest figures place postcodes within Birmingham, Bradford, Walsall, Blackburn and Romford in the top ten high-risk postal areas for ‘crash for cash’ scams.

 Crashed car

3. Fronting


Fronting is when someone misleads an insurance company about who the main driver of a vehicle actually is. This offence is most commonly committed by parents looking to get a cheaper car insurance quote for their newly-qualified or still-learning children. The reduction in cost can be significant, but it is still fraudulent so the consequences can be significant, too.


4. Change of circumstances


Insurers calculate premiums based on various factors. If any of these factors change, the price of the insurance premiums can change, too.


If you neglect to tell an insurance provider about a change in circumstances (e.g. a different home address, occupation, annual mileage or where you keep your vehicles overnight), you are committing insurance fraud. You need to be truthful when applying for insurance and keep your insurer in the loop when things change.


5. Abandoned vehicles


If someone abandons, sets fire to, or dumps their vehicle in another way and then false claims it has been stolen to get insurance money, this is considered vehicle fraud. If you need to declare your vehicle as off the road, you must let the DVLA know via a Statutory Off Road Notification (SORN).


6. Ghost brokering


Ghost brokers is the name given to criminals who pretend to be insurance brokers, selling fake policies to innocent motorists. These policies may have started life as genuine documents, but ghost brokers then modify them so they essentially become completely worthless.


The Insurance Fraud Bureau (IFB) is currently urging all drivers to watch out for these bogus deals being promoted on social media – new motorists in particular.


 7. Flash for cash


‘Flash for cash’ refers to incidents where a criminal flashes their lights to let another driver pass, and then crashes into them on purpose. In this kind of scenario, it’s hard to prove who is to blame, with the argument often coming down to one driver’s word against another’s.


Rule 104 of the Highway Code says that drivers need to: ‘Watch out for signals given by other road users and proceed only when you are satisfied that it is safe.’

 Taxi Headlights

8. Slam on fraud


Finally, slam on fraud describes criminals slamming on their brakes unexpectedly in the hope that the car behind will crash into them. The plan is they then make a false claim on their insurance to cover damages.


Exposing the myths around insurance fraud


Let’s be honest, insurance fraud isn’t a particularly nice subject to talk about. Yet it is really important we do talk about it and understand the facts.


On one hand we don’t want to fall victim to these scams. But on the other hand, not understanding the details could land any one of us in hot water.


It’s important you are 100% clear about what is required of you when you take out car insurance or renew a taxi insurance policy. If you do end up inadvertently breaking the law, claiming you made a mistake or didn’t realise you hadn’t updated your details won’t wash.


Equally, you need to be clear about the impact of fraud and make sure you know what is involved. To help you do this, here are some of the most common myths you’ll hear about insurance fraud – and the truth behind them.


Insurance fraudsters aren’t ‘proper’ criminals: They most certainly are. Insurance fraud is a serious crime, with equally serious consequences. Those convicted face a criminal conviction or imprisonment, find trouble securing future employment, and have difficulty getting insurance.


Insurance fraud doesn’t cause harm to others: Wrong. Many people believe that insurance fraud is a victimless crime. However, when an insurance company is dealing with high levels of fraud, other (innocent) customers can face higher premiums.


Fraudulent claims can have a mental and financial impact on the other party. Plus, the money gained from insurance fraud is often used to fund more dangerous, sometimes even deadly, crimes.


The police don’t get involved in insurance fraud: Wrong again. There is a specialist police unit that specifically deals with insurance fraud. It’s called the Insurance Fraud Enforcement Department (IFED) and is committed to making the lives and operations of insurance fraudsters as hard as possible.


No-one will know if I lie on my taxi insurance application: Our advice is: Don’t do it. It’s not worth the risk. Any misinformation given at the insurance application stage is considered fraud and your policy could be declared void if you have to make a claim down the line.

 Taxi at speed

How taxi drivers can protect themselves against insurance fraud


Taxi drivers tend to be behind the wheel much more than the average motorist, making them statistically more likely to be involved in a road traffic accident. As a result, they are also more likely to fall victim to motoring insurance fraud.


Fortunately, there are certain things taxi drivers can do to reduce the risk of getting caught out. Here’s your guide to staying insurance compliant (and one step ahead of the fraudsters).


Firstly, when it comes to taking out insurance for taxis, make sure you do so through a reputable seller. Drivers are urged to avoid deals on social media or messaging apps. Just remember, if it sounds too good to be true, it probably is.


When buying insurance, give the name on your policy document a call and check they have the correct information. And if you are still in any doubt, you can check if the insurer is registered with the British Insurance Brokers’ Association (BIBA) and appears as a registered member of the Motor Insurers’ Bureau (MIB).


When it comes to avoiding ‘crash for cash’, ‘flash for cash’ or ‘slam on fraud’ scams, there are a number of steps you can take to protect yourself behind the wheel. These are:


-        Keep your distance from the car in front.

-        Be aware of tailgaters.

-        Never assume another driver flashing their headlights is a signal for you to pull out.

-        Keep an eye out for other vehicles’ brake lights that don’t work.

-        Take extra care at roundabouts or in areas of stop-start congestion.

-        Look beyond the car in front. If you see erratic driving up ahead, slow down and be ready to brake hard.

-        Make sure you have a dashcam camera recording footage whenever you’re behind the wheel. Without it, it’s extremely hard to prove who’s in the right – and who’s in the wrong.


What to do if you think you’re an insurance fraud victim


If you suspect you’ve been involved in what you think is a ‘crash for cash’ or ‘flash for cash’ situation, stay calm and never admit liability. Take down the registration number of the other vehicle, call the police and take photos of the situation, road markings and the other car (whether or not it appears to be damaged).


You should always share your concerns with your insurers and other relevant bodies. These organisations include:


Insurance Fraud Bureau (IFB): This not-for-profit organisation focuses on uncovering and preventing organised fraud.


Insurance Fraud Enforcement Department (IFED): Set up in 2021, this specialist police unit is funded by the Association of British Insurers (ABI) and works closely with the insurance industry. Over the years it has convicted more than 440 insurance fraud criminals, leading to more than 242 years in custodial sentences.


Insurance Fraud Register (IFR): This is the first industry-wide database of known insurance fraudsters. Its goal is to protect honest customers and keep down the cost of insurance.


Protecting you and your business with taxi insurance


Your taxi is more than just your vehicle. It’s your livelihood. You need to protect it and yourself. It can be hard to predict the actions and behaviour of other motorists, but there’s a taxi insurance policy to suit you and your cab.


As a taxi driver, you’re behind the wheel more than other drivers, which can push up your insurance premiums. With Taxi Insurer, you’re guaranteed a fair deal – one that matches your needs and your budget – and gives you the protection you need.  


The specialist Taxi Insurer team searches the market for you, offering a range of benefits such as interest-free payment plans or the option to protect your no-claim bonus.


Our taxi insurance comes in a variety of different forms, including third party, fire and theft, third party only, and comprehensive cover. Public liability insurance and employers’ liability insurance can also be included.


Policyholders can benefit from a UK-based call centre and a 24-hour claims management service.


Getting a taxi insurance quote is simpler than you think. Get in touch today and find the right cover for you.

Policy benefits, features and discounts offered may very between insurance schemes or cover selected and are subject to underwriting criteria. Information contained within this article is accurate at the time of publishing but may be subject to change.