Eleven people from the Sicilian capital Palermo have been arrested, police said.
They include a hospital nurse who would procure painkillers for the victims in order to lessen their screams as their bones were broken.
"The two criminal associations broken up as a result of police investigations demonstrated a particular cruelty in the way they hurled cast iron discs like those used in gyms at the victims' limbs," police said in a
A police spokesman in Palermo told AFP that the gangs, operating separately in the city, smashed the bones of the victims, often drug addicts, alcoholics or people in severe economic difficulty, in order to stage fake road crashes and cash in on insurance payouts.
The gangs would place the victims alongside damaged vehicles on the side of roads on the outskirts of Palermo and use fake witnesses to speak to emergency services.
The victims, who police said would choose which bones they wanted broken, were attracted to the scams with promises of a 30-percent cut of the payouts, which police say were as high as €150,000 ($174,000) depending on the extent of the injuries.
However the gangs would often only pay 50-100 euros, if anything, to the victims, who were often reduced to using crutches or wheelchairs as a result of their injuries.
Police said that one of the two gangs inadvertently killed a Tunisian man in January last year when it broke his bones in order to stage an accident.
Despite his death, the gang continued with the scam, putting the corpse on the side of a road and claiming the insurance.