Think Twice About Insurance Fraud
30th October 2013
Think Twice About Insurance Fraud
Every week, New Zealanders are being caught out adding extra electronics, jewellery, cash and suitcase items onto their travel insurance claims.
Craig Morrison, SCTI CEO, says many otherwise honest people think nothing of exaggerating the extent of their travel insurance claim, not realising that any form of dishonesty on an insurance claim is fraud.
“Unfortunately we regularly see the type of insurance crime where we find out that a genuine claim has been inflated. Submitting false information during the application or claims process is a serious breach of contract and people tend to get very upset when they discover that their whole policy then becomes void - even the un-inflated parts of the claim won’t be paid.”
Those caught out can end up with their names on a fraud database or even with a criminal record and will subsequently find it much harder to get other kinds of insurance in the future. Morrison says this can have serious implications when it comes to getting insurance for a mortgage or insuring a car.
Insurance fraud in New Zealand is estimated to cost between $150 - $450 million each year, according to the Insurance Council of New Zealand. Travel insurance is believed to have the highest level of fraud estimated at 20%.
Morrison says the fraudulent claims SCTI receives vary in nature and severity, from slightly inflating a claim through to staging a claimable event altogether and adds that every dollar paid out against a fraudulent claim has an impact on premiums.
“There are some who think that insurance companies can
afford the loss, that’s why you get people who wouldn’t
normally lie throwing in an extra pair of sunglasses, or
adding some money into the stolen wallet.
Fraud is fraud however, regardless of how big or small. To us someone claiming for $10,000 of items that were never stolen is equally as dishonest as adding a few small items to a claim to try and cover the costs of excess, premium and depreciation.“
“Our claims assessors are very well trained and have processes in place to analyse and detect fraud. The only ones who have to be concerned are those who are lying.”
As well as internal claims assessors, SCTI utilises the services of specialist fraud investigators as well as national and international fraud databases.
Examples of exaggerated and false claims
• A claim for a suitcase and its contents that was purported to have been lost by the airline. The insured claimed for a massive number of items, including a lot of high value items which should not have been in checked luggage. An SCTI claims assessor was curious about the large number of items in the claim so undertook an exercise to see if it was actually possible to fit all the items claimed for in one suitcase. It wasn’t and, when this information was put to the customer, they withdrew their claim.
• Someone purported they had forgotten two large suitcases when leaving their hotel. Upon returning to New Zealand they submitted a claim for them and the contents. Once SCTI questioned the likelihood of someone forgetting all of their luggage, they withdrew the claim.
• A person was staying with family in India. Upon returning, he claimed he had $15,000 in electronics, cash and jewellery in his bag stolen while travelling on a train. Investigators asked to speak to the family member he was staying with in India to verify; The claimant confessed the whole story was false and pleaded with SCTI not to speak to his family.
• A customer claimed for a $10,000 watch that he said had been lost in the ocean while jet skiing. This was investigated because the claimant had specified the watch on his travel insurance policy and SCTI thought it was unusual to wear a watch of this value when doing this kind of activity. Investigators found that after this customer submitted his claim with us, he had submitted a claim with a different insurer for exactly the same watch. When our investigators put this to him, he admitted that he made a false claim for financial gain.