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Managing the risks of a public sector motor fleet

One of the main issues for those managing public sector fleets over the next couple of years will continue to be managing claims costs arising out of road traffic accidents. A report by the Financial Services Authority suggested that Insurers lost 10p for every pound of premium they charged in 2010 on commercial policies, which will inevitably lead to an increase in premiums in this area.

The issues

Public sector fleet operators face additional difficulties when placing insurance with the market as their fleets are a specific target for fraudsters. This is for a number of reasons:

  • Fraudsters know public sector vehicles are insured.

  • Public sector fleets often comprise heavy vehicles that are slow to stop and usually cause extensive impact damage. Fraudsters like to know that any impact will write off their car, enabling them to bring excessive storage and vehicle replacement charges. 

  • Public sector vehicles are also targeted because their movements are more predictable. For example, we have acted for clients who have being targeted on a regular route to and from their depot by fraudsters slamming on their brakes. We have even seen one case where two brothers, each involved in separate accidents were ‘unfortunate’ enough to be rear shunted by vehicles belonging to the same public sector organisation on the same road
  • The fraudsters perception is that many public sector bodies handle their own claims, and that they are not as sophisticated at detecting motor fraud as insurers, adjusters and solicitors acting in this specialist arena.  As a result, those public sector bodies handling their own claims need to ensure that they are properly identifying and screening suspicious claims. Insurers and solicitors acting in the fraud sector have at their disposal a vast array of fraud detection and fraud screening tools, not always available to in-house public sector claim’s handlers.

The facts

A report from the Institute and Faculty of Actuaries in 2012 revealed that there was an 18% increase in the proportion of accidents involving injury (the greatest year on year increase since their records began) and a 9% increase in the average cost of small third-party bodily injury claims between 2010 and 2011 – all of which is set against a decrease of 11% in the number of third party damage claims. 

The report suggests that, whilst the number of accidents has gone down, the number of injury claims being pursued has gone up. Can it be possible for all these claims to be genuine?

In the USA (who we usually view as being very litigious) only 1 in 10 rear end shunts result in a claim – in the UK it is less that 1 in 2.

Reforms to the claims process have led to a reduction in the costs that can be claimed, and further reforms are proposed to the way that medical reports are commissioned and prepared, but are the reforms enough to challenge the claims culture?

In our view, what is clear is that public sector fleet managers need to have a clear post-accident strategy in place for dealing with fraudulent claims and need to provide their employees with adequate training to avoid being targeted by fraudsters in the first place.

Large geographical variations in claims

Manchester, Liverpool and Birmingham have a much higher proportion of injury claims than other parts of the country – 52% of third party accidents in Liverpool result in an injury claim (possibly linked to the high number of Claims Management Companies (CMC’s) who operate in those areas). Has a claims culture been fostered in the North West where none exists in the South West?

In the current economic climate, is there a saturation point to the number of texts offering compensation, before people give in?

Public sector motor fraud

Connected to the geographical distribution of claims is the fraud problem. The areas referred to above, and other high density areas such as Bradford, Leeds and areas of London are all fraud hot spots.

Fraud is endemic in motor claims both in the private and public sector, costing insurers and those with self-insured fleets as much as £2 billion a year. The sheer number of public sector vehicles on the road means that statistically, public sector vehicles feature in a fraudulent claim, every day.

Employees are sometimes complicit in the commissioning and/or execution of a fraudulent claim. Consequently, insurance and risk managers must be wary when they see drivers being involved in an accident which gives rise to multiple claims, particularly when the driver is new to the organisation, as the whole accident could be a fake or ‘staged’ accident. Employees being involved in a number of collisions might also be a red flag.

The second type of fraud claim often seen involving public sector vehicles,is the ‘induced’ accident or ‘slam on’: fraudsters will slam on their brakes, causing the innocent vehicle to collide into the rear of their vehicle. Typically this kind of incident might arise at a roundabout, or near a junction but might also involve the fraudsters swerving in front of the innocent driver, and then braking. Often fraudsters employ a second ‘stooge’ vehicle which drives erratically and seemingly causes the first vehicle to break in front of the innocent motorist, and provides the fraudster with a credible reason for braking.

DWF have acted in a number of claims where fraudsters have targeted local authority refuse trucks. These slow moving, large, heavy vehicles seem to perfectly fit a fraudster profile.

But it is possible to successfully defend these claims. Rob Morgan and Andrew Stratton, were last year sentenced at Cardiff County Court for staging an entirely fictitious accident involving a Cardiff City Council refuse truck - a prime example of the insurer, local authority and loss adjuster working well together to bring about a conviction.

In some instances, the fraudsters add in claimants and it is not uncommon for drivers to report that there were only two occupants in the other car, but for claims to be then received from five individuals. These additional claimants are often referred to as ‘phantom passengers’.

What you can do

In order to ensure to minimise your exposure to claims, fraudulent or otherwise, then in our view there is a "golden hour" after an accident in which as much information as possible need to be collected:

As well as the usual details exchanged at the scene, your driver should be instructed to take photos (or videos). Ideally, photos should be taken of the occupants in the other vehicle (to help in matching up the number of claims received with vehicle occupants), the vehicle itself, any debris, the road layout and immediate surrounding area, preferably with the vehicles still in situ, which helps to put the accident location in context and deal with liability disputes, and also makes it more difficult for accidents to be staged.

Drivers should be trained to always take full details of all parties and witnesses, to include full names, addresses and telephone details, so that if necessary contact can be made. Make use of bump cards so that you or your insurers are first to offer repairs and replacement vehicle to minimise exposure to inflated claims. In cab video camera technology is now very cheap and can be the difference between paying a claim and the claim never getting off the blocks. Telematics (GPS tracking and vehicle data recording) is also having a great influence in the prevention and detection of fraud.

Upon return to the depot from the scene, it is best to ensure that an early account is taken from the driver of the accident circumstances.  This helps ensure that the best account of the accident is taken and can prevent problems later. We acted for one local authority who failed to take a statement from a "meals on wheels" driver involved in an accident.  Three years later the driver had retired and could not be located and as a result the claim had to be settled.

Drivers need to know about how they might be targetted by fraudsters and that accidents are diligently investigated. If claims are handled in-house then we would recommend that outside assistance and training is sought with identification and claims screening.


Most public bodies are self insuring or have a high deductible, and making savings in motor claims by optimising processes and procedures can save significant sums, when budgets are tight. Claims teams can play a significant part in reducing claims costs.

If the drivers have been trained in a strict process to follow in the event of an accident, then the chances are increased that the evidence will have been gathered to defend the spurious and fraudulent accident claims.

We would be keen to assist you in ensuring that your claims processes are properly tuned and fit for purpose.


For further information please contact Gavin Perry, Partner on 0151 907 3493 or at gavin.perry@dwf.co.uk or Paul Holmes, Partner on 0113 261 6521 or at paul.holmes@dwf.co.uk

A version of this article featured in the Alarm Public RM Quarterly Journal Autumn 2014.

Read other articles from the autumn 2014 Local Authority Brief:

We talk to… Chris Walker, Assurance Manager at Coast & Country Housing
Sport and leisure activities: minimising the risk of injury and defending claims
Stress and harassment update
Does a local authority have a non-delegable duty for abuse by foster carers?

By Gavin Perry and Paul Holmes

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.