INSURANCE experts have warned crash for cash scams could be costing the North East economy millions of pounds.

This come after police in Sunderland arrested five people as part of an investigation into suspected fraudulent claims around staged crashes.

The arrests were made on the day that a new report about the crash for cash phenomenon was published by the Insurance Fraud Bureau (IFB).

In the report, Crash for Cash – putting the brakes on fraud, it was estimated that crash for cash costs the UK nearly £400m every year, with honest policyholders ultimately picking up the bill through increased premiums.

Michael White, director of Coversure Insurance Services in Cramlington, Northumberland, said it was an increasing problem for the North East in particular.

Newcastle has been labelled as a hotspot for crash for cash scams and Mr White said the situation was getting worse.

“If Newcastle alone is one of the top hotspots then it’s fair to say it’s costing the region millions,” he said.

“Newcastle has moved up the table of crash for cash hotspots from 2010, before that it was in other parts of the country but now it is a big problem here,” he said.

“You could be a victim personally, you could be caught up in a staged accident. Not all of the people involved are willing participants.

“Sometimes you will have someone put you in the middle of three cars and slam the brakes on. There’s no real damage to the car in front but all in the car will claim to be injured and you will be facing a £20,000 to £30,000 claim.

“A few years ago this would have been £400 to £500 to sort out and now it just leads to high premiums.

“Staged or deliberate accidents are becoming more of a problem,” he said.