By David Green, SBD Vehicle Security Technical Specialist

Crime levels normally spike following periods of financial hardship, and in the past two years it seems many criminals are turning to fraud – whether obtaining vehicles by deception, such as using fake identification and banking details, or through fake insurance claims. This trend is common across different countries, with rises in ‘crash-for-cash’ schemes (where accidents are staged in order to claim on insurance policies) and falsified theft claims in particular.

In the UK, fraudulent claims are the primary reason behind the 40% inflation of insurance premiums during 2010, now estimated to add between £40 and £80 onto every policy. Insurance companies in the USA declare that they lose $14 billion a year on fraudulent motor claims, and that 20% of all theft claims are untrue.

Increased fitment of security features and improvements in features such as immobilisers also means insurers consider it highly unlikely that vehicles can be stolen without using an original key.

Understandably, insurance companies are therefore increasingly wary of the nature of any theft claim, because in many instances they are not genuine. Whilst this may catch out numerous fraudsters, this also means that some genuine claims are being rejected, and these ‘innocent’ parties caught in the cross fire are not getting the protection of the cover that they have paid for.

All these factors mean that a claim for theft of a newer vehicle, which the owner says was locked at the time of the theft and can provide all vehicle keys, is usually assumed to be fraudulent by insurers unless the customer can prove that the car could have been taken without the key.

In actual fact, there are a number of ways in which thieves are able to steal vehicles without the use of an original key. There is increasing activity from organised crime groups using complex, high-tech electronic theft methods to bypass immobilisers, or using legitimate dealership tools to exploit loopholes in the security systems. Vehicles may also simply be towed or lifted onto recovery trucks to be quickly removed from the area, allowing the thieves to replace security components or strip the vehicle for parts in their own workshops away from the scene of theft.

With key theft rising and improvements in vehicle security, it is easy to assume that newer vehicles are extremely difficult to steal without a key, but there is a rising number of claimants taking legal action and discussing their problems in open forums. This is ultimately bad for the insurance industry. A higher understanding of the latest theft methods and trends will help the industry to better distinguish between genuine and fake theft claims, allowing them to protect themselves against fraud whilst still protecting customers against their car being stolen.

You can find out more about the latest methods in vehicle crime as well as new anti-theft strategies for the next generation of vehicles within SBD’s report titled Vehicle Crime in the 21st Century and the impact of electronic theft methods. For more information on how to purchase your copy, contact Juanita Appleby on jappleby@sbd.co.uk