By Jeffrey Chan
Hong Kong, 30 December 2024: Two major police operations in recent weeks have highlighted the long-running issue of fake traffic accidents and the headaches these cause for insurance companies, the government and law enforcement agencies. Bogus claims around motor incidents are part of a rising trend of insurance fraud, with the authorities enhancing measures to combat it.
In early November, police revealed they had arrested 275 people on charges such as deception and conspiracy to defraud. They were alleged to have orchestrated accidents and sometimes forged medical certificates for sick leave. Officers revealed the collisions were highly organised and used scripts that outlined participants’ different roles. The force said the cases were not the work of a single syndicate but had involved “a series of personnel”, including triad group members.
Shortly before Christmas, another police operation saw 39 individuals arrested on suspicion of staging 33 traffic accidents. Their occupations included clerical staff, salespeople and logistics workers, while some were unemployed. One incident was alleged to have involved collusion between 13 people.
Both crackdowns targeted groups and individuals who had claimed a total of HK$16 million in payments from the Social Welfare Department’s Traffic Accident Victims Assistance scheme, which provides funds for people caught in road accidents. Police said some applicants had claimed subsidies ranging in value from HK$2,000 up to HK$150,000.
These were not the first police actions. Last April, officers arrested 11 people, including a 14-year-old, for their involvement in a string of 44 minor collisions that targeted innocent drivers. It was alleged the group would convince the driver he or she was responsible for the accident and would demand compensation for purported injuries. Police said 16 drivers had paid up “out of guilt for injuring a minor”.
Typically, it is insurers who bear the brunt of fraudulent traffic accidents. The most common types involve inflating the value of the claim and/or exaggerating injuries. So-called victims are encouraged to seek medical treatment even when their injuries, if any, do not warrant it. They expect medical expenses to be recoverable and that the longer they can prolong sick leave, the better the windfall from any civil claims. Beyond this, there are frequent examples of misrepresentation, non-disclosure, falsified documents and filing claims for disability benefits while continuing to work.
It is a global problem. The General Insurance Association of Singapore estimates around 20% of motor insurance claims in the city-state are fraudulent, often involving exaggerated injuries and inflated vehicle damage. In the US, the Insurance Information Institute reports a nationwide increase in such behaviour, with New Jersey leading the way with a 58% annual rise. The organisation estimates that bogus collisions cost every American driver between US$100 and US$300 more in annual premiums.
In the UK, the Insurance Fraud Bureau is currently investigating over 6,000 suspected fraudulent motor insurance claims – many involving induced collisions – worth an estimated £70 million. Insurer Allianz has warned of a fast-emerging trend of “crash for cash” incidents featuring motorbikes and scooters in which riders seek to clip a car and then blame the driver.
In Hong Kong, the authorities are fighting back. Since 2019, the Hong Kong Federation of Insurers has operated its Insurance Fraud Prevention Claims Database. Featuring state-of-the-art technology, the platform is a crucial weapon in detecting different types of insurance fraud, particularly those involving multiple claims and syndicates.
The police have established an insurance fraud task force within the Commercial Crime Bureau to monitor emerging trends and conduct targeted investigations. The force maintains close liaison with government departments and insurance industry stakeholders. The Independent Commission Against Corruption, meanwhile, frequently investigates suspected motor insurance fraud.
It is worth pointing out that induced traffic accidents may involve offences such as theft, fraud or obtaining property by deception under the Theft Ordinance (Cap 210), and/or the common law offence of conspiracy to defraud, with maximum penalties of up to 14 years in prison.
Here at BC&C, we have a burgeoning Insurance and Personal Injury team and we act as panel solicitors for several major insurance companies, handling not only motor insurance claims but also matters concerning healthcare, employees’ compensation and property damage, among others. At the same time, we care about the concerns of policyholders, meaning our lawyers also act for private and legally aided clients. For all aspects of insurance law, we are ready to assist.
Jeffrey Chan has been a Partner in BC&C since 2015 and leads the firm’s Insurance and Personal Injury team which advises on legal matters and handles court cases for insurance companies and/or their insured parties. He practices all areas of civil litigation with a particular emphasis on personal injuries and property damage claims, employees’ compensation legislation and insurance-related disputes. He can be contacted at jeffrey@boasecohencollins.com.