New car insurance update will crack down on measures that 'increase the cost of premiums for honest drivers'

New data from the Home Office found that 84,400 fraudulent claims were made in 2023 alone. The Association of British Insurers (ABI) detected claims worth £1.1billion, a 16 per cent rise compared to the year before.

So-called "crash for cash" schemes are becoming one of the main ways people fraud other motorists by orchestrating an accident to put forward an insurance claim.

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Fraudsters are also taken efforts to make claims for accidents that never happened, prompting the crack down from the insurance industry.

The Insurance Fraud Bureau (IFB) is currently investigating over 6,000 suspected fraudulent motor insurance claims, many of which could be linked to crash for cash schemes and be worth over £70million.

A new insurance fraud charter was announced at the latest Joint Fraud Taskforce meeting to identify loopholes, enhance criminal justice outcomes, and better understand the scale of the issue.

Commenting on the new measures, Lord David Hanson, Minister of State at the Home Office with Responsibility for Fraud, said: "Fraud is an appalling crime, and we are determined to crack down on these callous criminals.

"Not only do honest customers face higher insurance premiums but these fraudsters do not care if people are harmed in the pursuit of profit.

"This charter is an important step, and we will continue to work with industry and law enforcement to better protect the public from fraud."

Pledges include the National Crime Agency's National Assessment Centre carrying out a review into the role of professional enablers in the insurance sector.

It will also identify policies exploited by "illegal insurance intermediaries", which is when someone pretends to be a broker or sells completely fake insurance to customers.

The Taskforce has pledged to review the tactics and websites being used by fraudsters to promote bogus offers. It is hoped this will better identify and support victims.

Hannah Gurga, ABI Director General, said: "Insurance fraud remains an ongoing threat that corrodes trust in society and undermines our economic prosperity.

"Tackling insurance fraud is an industry priority, and requires a collaborative approach between private and public sector.

"We're delighted to have agreed the Insurance Sector Fraud Charter with the Home Office, boosting the industry's resilience and ability to fight fraud."

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The charter covers the vast majority of the insurance sector and has the backing of the British Insurance Brokers' Association, London and International Insurance Brokers' Association, Lloyd's of London, Lloyd's Market Association and the International Underwriting Association, alongside ABI.

Temporary Assistant Commissioner Nik Adams, from the City of London Police, said the launch of the new charter would be backed by the industry, noting that insurance fraud is not a victimless crime.

He added: "It increases the cost of premiums for honest customers, while fraudsters who sell fake car insurance or deliberately cause road traffic collisions to claim compensation put motorists at risk."