Smash and grab: rise of the ‘car kidnappers’
Motor claimants are falling into the trap set by illicit accident management businesses, but insurers are fighting back
By John Deex
When someone rear-ended Sophie Collins’ 2019 Kia Sportage, she managed to drive the badly damaged vehicle back to her home in Narrabeen, New South Wales.
But she was so shaken up, her father offered to call her insurer, AAMI, on her behalf. After a quick Google, he called the top search result – and there began a four-month ordeal Ms Collins describes as “horrendous”.
AAMI customer Sophie Collins’ Kia after it was rear-ended
Her father had not called AAMI. He had inadvertently contacted one of a rising number of accident management companies eager to take control of not-at-fault claims by promising free hire cars and efficient service.
Even insurers would accept that in recent years, not all motor claims have run smoothly. Supply chain issues have caused significant delays in some cases, and last year motor overtook home insurance as the most complained about general insurance product. This has created an opportunity for accident management and credit hire companies to promote an alternative route to recovery.
Unfortunately, their promises can be very different to the reality. Insurers say some of the companies deliberately design Google ads – and their own websites – to give the impression they represent major insurance brands. Some also send tow trucks to accident scenes, to sign up consumers when they are at their most vulnerable.
Even worse, if the company fails to recover hire car costs from the at-fault party, the bill can boomerang back to their customer.
Consumers who realise what’s happening sometimes struggle to get their cars released, repairs can feature substandard parts, and costs are often inflated – leading to unnecessary expense, which in turn results in higher premiums for everyone.
There are a variety of models out there. Some focus on just one part of the chain, others try to cover the whole journey. Some are blatantly fraudulent, others are acting legally – but customers regularly report misleading behaviour.
Ms Collins tells Insurance News that when her car was taken away and a hire car provided, she had second thoughts and asked for her vehicle to be returned.
“I had that feeling of uncertainty,” she said. “I thought, ‘I’ve made the wrong choice here.’ ”
But she says the company went quiet on her, and then she found out the car was being repaired against her wishes.
She finally made direct contact with AAMI, which requested the vehicle, but she says the accident management company refused to hand it over.
“There was back and forth. It went on for months. AAMI weren’t going to do anything until they got the car. The claims firm was saying, ‘No, you can’t have the car back.’
“I kept on saying, ‘It’s my car, I want my car. You can’t hold my car hostage.’ They finally agreed to let AAMI come and pick it up.”
Ms Collins returned the hire car and AAMI paid her for the total loss of her vehicle.
“The gentleman at AAMI said [they] could see the paintwork already peeling, and there was silver paint underneath, so they’ve used second-hand parts. He said, even after the repair, it’s still a write off.”
Insurance News is aware of another case similar to Ms Collins’ in which insurer Allianz was forced to take a repairer to court to recover a customer’s vehicle.
Again, it began with the insured “Googling a number for Allianz claims” and calling the number that “popped up”.
Allianz successfully argued the vehicle had been “wrongfully detained” and got it back. It proposed that any agreement with the customer was void because it contained “clearly unfair contract terms”.
QBE says it has seen an increase in towing, administration and storage costs submitted by “rogue towing companies”, as well as a rise in credit hire demands “driven by longer unreasonable hire car durations with unjustifiable daily rates”.
“Additionally, claims farmers encourage consumers involved in accidents to submit fraudulent personal injury claims,” general manager of short tail claims Arron Mann tells Insurance News. “These additional expenses burden insurance claims costs, which are eventually passed on to consumers through premium increases.”
RACQ Insurance last year won an International Association of Auto Theft Investigators award for its work with Google on misleading online ads.
Manager of counter-fraud and investigations Glenn Rowe tells Insurance News: “These companies’ tactics are becoming more sophisticated.
“We’ve seen fraudulent schemes where they will try cold calling customers, door knocking, advertising online with incentives, and working with credit hire businesses to refer details over to accident management companies.”
The “elaborate scheme” the insurer worked on with Google targeted people involved in genuine accidents through a “click to call” internet ad that appeared to belong to RACQ.
“Instead of reaching their insurer’s claims department, they were unknowingly diverted to an overseas call centre, where manipulative agents posed as RACQ representatives and pursued inflated claims against the club,” Mr Rowe says.
He says this type of fraud, also known as search engine or paid ad spoofing, increases the cost of claims by as much as 60%, and targets people during a vulnerable time.
“Google was very receptive and worked with our team to change the format of these online ads, resulting in a massive win for RACQ, the insurance sector and the wider community.”
“I kept on saying, ‘It’s my car, I want my car. You can’t hold my car hostage.’ ”
Policyholder Sophie Collins
But problems persist. The Western Australia government recently issued a warning about “third-party companies intercepting insurance claims”.
So far this year, WA Consumer Protection has been alerted to 11 cases of consumers being misled after searching online for insurer contact details.
One victim, whose car was towed despite only being scratched, became suspicious when she was asked to tell her insurer the vehicle was unroadworthy. She rang her insurance company, which had no record of the claim, and was then sent a towing invoice for almost $7000.
Another WA victim, whose damaged car was also safe to drive, received a $4500 towing bill, which was eventually paid by her insurer so the car would be released.
“To tell crash victims their vehicles are unsafe and need towing, when that’s clearly not the case for minor panel damage, is misleading and could contravene the Australian Consumer Law,” WA commissioner for consumer protection Trish Blake said.
“Our problem isn’t with genuine and reputable accident management companies. It’s with these particular operators that are posing as insurance companies and making false representations to consumers about needing services.”
There are legitimate accident management companies that collaborate with insurers and do not engage in aggressive recovery practices.
Acting as third-party administrators, these businesses can bring scale, capacity and specialised expertise to claims, often working as an extension of insurers’ internal teams.
But it’s the companies that aim to steer not-at-fault motorists away from their insurers that are causing so many problems.
The Insurance Council of Australia says it has “significant concerns” about some credit hire and accident management companies – and it is taking the issue up with regulators.
“While these companies claim to offer a smooth and cost-free experience for not-at-fault drivers, promising the use of a ‘free’ hire car, towing and repair, they operate in a regulatory grey area, allowing them to exploit loopholes in consumer law as well as financial services regulations related to claims handling activities,” a spokesperson says.
Insurance News understands credit hire companies do not need to hold an Australian Financial Services Licence, as they fall through the cracks of the Corporations Act.
ICA has raised concerns with state, territory and federal government regulators that such companies could be linked to unnecessary premium increases.
“ICA has called for stronger regulatory measures to combat unethical practices in credit hire and accident management,” the spokesperson says.
It encourages anyone who receives a call from a suspected claim farmer to report the incident to the Australian Competition and Consumer Commission. Ms Collins tells Insurance News she’s clear about what to do, if there’s a next time.
“I’ll contact my insurer. AAMI has been great and if I’d gone straight to them, I would have gotten the payout within two weeks.
“I don’t understand how [accident management] companies are running like that. They should be banned.”
How not to fall for a spoof ad
Verify the website
Always double check the website URL before entering any personal information. Legitimate car insurance websites will have verified URLs featuring a padlock or double-line icon in the address bar.
Save details in your phone
Save important phone numbers (like your insurer’s accident line) in your phone, so you’re not searching for them when in need.
Use official apps
Whenever possible, use official mobile apps provided by your insurance company. These apps are generally more secure than going through a web browser.
Educate yourself
Stay informed about common online scams and phishing techniques.
Report suspicious ads
Report any suspicious or misleading ads you come across to the ACCC and respective platform (such as Google).
