(Yicai Global) July 16 -- Shanghai authorities have arrested 12 gangs of criminals who exaggerated and fabricated motor accident victims' injuries to con insurers out of CNY100 million (USD14.6 million).

The Shanghai Public Security Bureau has arrested 12 ringleaders who have been running the rackets since 2014, it said yesterday. The year-long investigation led to 125 people being detained on suspicion of colluding with appraisers and attorneys to inflate and fake damages to defraud insurers. The appraisal agencies in question have had to shut down operations until they clean up their act.

Complications in the settlement of traffic accidents in China have led to the emergence of claims agents, who receive service fees to help victims win damages from traffic accidents. As compensation for injuries and psychological damage often makes up most of the damages, these intermediaries seek to maximize their clients' claims illegally.

The middlemen pair up with appraisers and lawyers to lie about the extent of, or fictionalize injuries -- but do not disclose to their clients how much compensation they are seeking and pocket the difference for themselves.

Editors: Zhang Yushuo, James Boynton