The current economic recession is resulting in an increase in automotive insurance fraud, according to a report by Absolute Fraud Management in the UK.

They said that their investigations on car insurance fraud have risen from 11% in 2007 to 19% in 2008, and that the most prolific form of fraud is misrepresentation. This is the act of giving incorrect information to get a lower premium.

Organized crime is involved too, but in a much more sinister type of insurance fraud - "crash for cash" scams. These involve the fabrication of fake accidents to receive funds for fake personal injuries and car damages.

Such scams cost the insurance industry £1.6 billion per year just in the UK and only result in 5% higher premiums for the rest of the population.

Malcolm Tarling, of the Association of British Insurers said, "We know from history that there's a very close link between the
economic cycle and the likelihood of people committing insurance fraud. Obviously, when money's tight and people are looking to cut back
there are going to be a few people out there who will see insurance companies as a source of easy, and illegal, money."

In one bust, by the Hertfordshire Police, a "crash for cash" gang received a total of a decade in jail. Metropolitan Police Inspector Nick Chalmers commented on such organized crimes, "Innocent members of the public are being involved in serious
collisions by criminal gangs just to make money. It is putting them and
other road users seriously at risk."

Even individual owners are involved by paying third parties to light their vehicles on fire, in exchange for a fee. One man who reportedly was paid for such insurance fraud activity said, "It's been unbelievable recently because of this recession," he
says. "People are scared of losing their jobs, so they want a lump sum. Get rid of the car and they get a cheque."