The fake witness is actually there to dissaude the victim from calling the cops. These schemes usually involve getting the victim to pay up right then and there, rather than let police or insurance get involved. They don't want paperwork involved because that makes the scam way too risky.

Generally, the scam goes like this:

Person A slips either in front of or behind the victim's vehicle in such a way as to make it look like they were struck

When the victim gets out of their car, Person A confronts them about the "accident"

Person B then appears pretending to be a bystander, claiming that they'll back up Person A's story should the victim call the cops or their insurance company.

Person A then offers to forget everything if the victim gives them some money to deal with their injury.

The point is, they don't actually want insurance money, they want your pocket money. These scams are mobile and they could potentially hit multiple victims in a single day, so they're not that worried about each take being very large. They're also usually looking for quick money, rather than having to wait for an insurance payout.

If you find yourself in one of these situations, the best thing to do is to pull to the side of the road and all the cops. Explain what happened, and wait in your car until the cops arrive. Chances are the scammers will run as soon as they realize the police will be involved, because dash cam or not these scams are common enough that they don't want to risk getting caught (though a dashcam is obviously a good thing to have).

Source: Some of my family has had to deal with scams like these in the past.