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Motor insurance fraud: Reports of sham accidents on the rise

Majority of the cases are linked to syndicates that trick unsuspecting individuals into doing their dirty work.

SINGAPORE: While a good number of traffic accidents in Singapore are exactly that – unfortunate accidents – some of them might point to something more sinister.

According to the Commercial Affairs Department (CAD), the number of accidents reported as fraudulent has doubled, from 13 in 2016 to 26 as of September this year.

Prosecution figures have also gone up. A total of 66 people were charged for motor insurance fraud last year, a near 40 per cent increase from the 48 charged in 2014.

Motor insurance fraud is the act of deceiving insurers into giving a payout for property damage or personal injury caused by a fake traffic accident.

Moreover, a majority of motor insurance fraud cases are linked to large-scale syndicates, officers from CAD's insurance and specialised fraud branch revealed on Friday (Nov 10).

And anyone can fall for their ruse.

“Generally, my observation is that a lot of people are sucked into this,” head of branch Superintendent of Police Abdul Rani Abdul Sani said. “In the last five or six years, there have been at least five major syndicates.”

These groups can stage accidents by deliberately jamming on the brakes, or engineer accidents by intentionally damaging vehicles at a secluded location.

Like any organised mob, they have masterminds, recruiters and even stunt drivers and phantom passengers.


Some syndicates also operate overseas and involve foreign nationals together with foreign-registered vehicles, Supt Rani said.

So, how do these groups grow so large? 

Potential recruits are tricked into putting “blind faith” in so-called experts like auto mechanics, or trusting friends and family who happen to be members of a syndicate, officers said.

“It really works like MLM (multi-level marketing),” Deputy Superintendent of Police Johnny Sim, team officer-in-charge, said. “You have done this; you ask a friend. That friend gets involved, then starts asking his friend. It expands.”

Syndicates constantly need more members because stunt drivers require phantom drivers to hide their identity and avoid submitting multiple claims under the same name.

“Some people start off as phantom passengers or phantom drivers,” Supt Rani said. “Then they find this is easy money, so they become a recruiter.”

Phantom drivers can earn about S$500 per claim and an additional S$200 for each passenger recruited, Inspector P Kumarasamy said.

Each member earns an amount “commensurate to the roles that they play”, Supt Rani noted. Deals are also sweetened by the promise of successful personal injury claims.

General Insurance Association (GIA) statistics show that about 160,000 accidents were reported last year, leading to nearly S$500 million worth of incurred claims.

Based on its estimate that a fifth of all motor claims are fraudulent or inflated, this means that S$99 million was lost due to fraud – costs ultimately borne by motorists in the form of higher premiums.


To that end, Supt Rani acknowledged that it is tough to distinguish between real and fake accidents.

“Anyone can submit a claim for injury knowing that they may not be injured. It’s so easy – just a matter of going to the doctor and signing some documents," he said. “Some cases may not be detected at all.”

And because the syndicates have multiple layers, dismantling them is difficult.

“Investigations into these syndicates is very complex because it involves many parties,” Supt Rani said. “Some within the conspiracy also have their own operation."

“It all boils down to the quality of the interview of all the witnesses that the officers showcase in order to crack the whole case," he added.

However, not all of them cooperate when interviewed. Some might deny their involvement, Supt Rani said. Others might feign forgetfulness. “Sometimes, it will take a longer time to show the link between one accident and another.”

In the case of one syndicate, where one of its masterminds helped stage 21 accidents and submitted fraudulent claims amounting to about S$1.1 million, officers took a good two years to bring it down.

“It took quite a while because there were really a lot of accidents involved,” DSP Sim said, adding that more than 100 people were interviewed.

“When you want to take down the mastermind, you must build up enough evidence,” Supt Rani added. “Otherwise, in court the whole case will be thrown out.”


But the branch is not alone in the battle against motor insurance fraud.

It works with GIA and insurers to discuss trends and new issues, Supt Rani said. “We also look at how we can improve situations in order to deter or prevent motor insurance fraud.”

Increasingly, insurance companies have their own special investigative unit too, a GIA spokesperson said.

“This unit is responsible for detecting and investigating claims in greater detail and pursuing action against fraudulent activities on the part of insureds or claimants."

If there is strong suspicion or evidence of fraud, insurers might report the case to CAD, the spokesperson added.

“If it’s not so easy to get the payout from the insurers, then it doesn’t benefit the masterminds to keep doing this,” DSP Sim said.

The GIA also has an anti-fraud hotline and a fraud management system that applies data analytics in insurers' fraud handling processes to track phony claims.

“While we are in the early stages of the system, results are starting to show,” the spokesperson said.

Nevertheless, Supt Rani reminded the public that the responsibility lies with them.

“The seriousness is the fact that a lot of people participate thinking that they can actually gain from this," he said.

The maximum penalty for cheating under Section 420 of the Penal Code is 10 years’ jail and a fine. Abettors of acts of cheating face the same.

“A lot of times they think that they don’t have the intention to cheat, so they won’t be charged for cheating,” DSP Sim said. “But the issue is what they do actually facilitates the other person to cheat the insurer.”

Supt Rani stressed that those in the lower ranks of a syndicate will never know the full extent of the crime being committed.

“What he knows is when he joins, he will be making a false claim, but he doesn’t know the size of the syndicate," he said.

“The most important thing is they should realise that if they are having financial difficulties, never get involved in such things.” 

Source: Channel News Asia

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