Are you blacklisted? We reveal the addresses insurers won’t touch and the disturbing reasons why ...

Published 04th May 2011

Honest motorists face soaring premiums as a ‘fraud epidemic’ sweeping the country causes insurers secretly to blacklist certain postcodes.

Motorists have seen a record 40 per cent hike in premiums over the past year, with the average annual comprehensive policy forecast to break the £1,000 barrier within 12 months.

Insurers say a major reason for this increase is fraudulent claims that are estimated to cost £2.7  billion a year, adding £44 to the annual premium of honest motorists.

Confidential documents from a leading fraud specialist shown to Money Mail pinpoint areas across the country where insurers are putting premiums up even further because of high concentrations of fraudulent claims. And brokers say some insurance firms are refusing to cover motorists at all in certain areas.

Common frauds include staged accidents, often perpetrated by criminal gangs who deliberately cause innocent motorists to crash into them. Last week, three more people were jailed for a £5.3  million ‘cash-for-crash’ scam at Luton Crown Court.

Other examples include bogus injury claims — whiplash being the most common — and fronting, where parents cut costs by claiming they are the main driver on an insurance policy for their child’s car.

Each year, Keoghs — a law firm specialising in investigating suspicious claims on behalf of insurance companies — publishes the worst areas for fraud. But it also provides insurers with secret information on the worst postcodes. This list, which is not made public, has been obtained by Money Mail.

The top ten areas for suspicious claims are parts of Birmingham, Liverpool, Bradford, East London, Manchester, North London, Bolton, Blackburn, Southall and Oldham. These towns and cities account for more than four in ten suspicious claims.

The worst ‘blackspot’ is Birmingham — generating almost one in ten suspicious claims. This compares with fewer than one in a hundred in West London. But the analysis given to insurers also shows huge variations within towns and cities.

The postcode B8 — east of Digbeth in Birmingham — generated almost 13 per cent of suspicious claims in the city. Meanwhile, just over 1  per cent came from B15 in Edgbaston, according to 2010 analysis.

Areas that have seen the biggest growth in suspicious claims this year include Newcastle, Peterborough, Preston and Chester — all now rated as ‘fraud blackspots’.

James Heath, head of counter fraud strategy at Keoghs, says: ‘We are now seeing what can reasonably be described as a fraud epidemic across the UK.

‘It is clear from these results that fraud is no longer restricted to the country’s most heavily built-up areas.’

The result is that even law-abiding drivers without a claim to their name who live in these areas can struggle to find affordable insurance. One insurance broker, based in London, told Money Mail about several quotes he had recently secured on behalf of customers where most insurers had refused to provide cover because of the area in which they lived.

One 58-year-old male driver living in Wood Green, North London — N22 — saw his premiums double from £727 to £1,598 when his policy came up for renewal this year.

Zurich, Ageas, Axa, Provident and Royal & Sun Alliance all refused even to provide a quote, labelling it an ‘unacceptable’ area. A customer living in E4 — Chingford, East London — had a similar problem.

The broker says: ‘There is no doubt some postcodes are blacklisted by most insurance companies because these areas are deemed to be too high risk.’ Other insurance brokers report a similar story.

Ian Crowder, from the AA, says: ‘It’s a bit of a postcode lottery. Certainly some areas are in danger of being blacklisted by certain insurance companies because they are seen to pose such a high risk.’

Graeme Trudgill, head of corporate affairs at trade body the British Insurance Brokers’ Association, says: ‘As with flooding, there are certain areas that insurers are just not keen on. We’ve heard of rates in some parts of Birmingham tripling.’

The insurance industry — spearheaded by its trade body the Association of British Insurers — says it is doing everything it can to crack down on fraud. In 2006, it set up the Insurance Fraud Bureau to detect fraud and expose criminal gangs. It pools the information of insurance companies and is helping police on 27 police investigations.

Glenn Marr, director of the IFB, says: ‘This fraud has an impact on the cost of insurance for genuine customers and the industry is committed to rooting out and bringing to justice those criminals who target insurers.’

An Axa spokesman says: ‘For areas where there is a high risk, we do refuse cover and we use historical claims information to help us determine these areas.

‘Our experience shows us that certain areas give rise to exceptionally poor claims, but these are not exclusively driven by fraud.

‘Axa employs a number of fraud prevention initiatives to ensure we are preventing certain individuals from getting cover rather than penalising large groups.’

Stuart Lea saw his annual motor insurance premium with Direct Line jump from £800 to £1,100 when it came up for renewal this year.

Mr Lea, 33, from Birkenhead, near Liverpool, says he was baffled because he has an impeccable driving record and has built up 15 years of no claims.

‘Every year my premiums go up,’ he says. ‘It’s disgusting that honest drivers have to foot the bill for fraudsters.’

Mr Lea shopped around for a better deal using comparison website Moneysupermarket, securing an annual policy for £670 from Admiral.

Andy Goldby, from Direct Line, says: ‘We have witnessed an increase in both the number of claims and their severity in Mr Lea’s postcode, in particular relating to whiplash claims.’

Source: ' 'ThisIsMoney' '

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