According to the Insurance Council of New Zealand, insurance fraud costs New Zealanders a conservative $65 million a year.
Anyone with a mortgage, petrol or food bills needs little reminding that the financial climate is not the same as it was a year ago. With the added financial pressures of this time of year, it is not surprising that historically the number of suspicious or outright fraudulent insurance claims increase over the Christmas period.
Many people will be entering the new year with debt from pre-Christmas spending and New Zealanders as a whole are experiencing recessionary pressures. Those who are tempted to put in false or inflated insurance claims should think twice - it’s not worth it.
State employs a large number of investigators throughout the country and checks New Zealand’s Insurance Claims Register (ICR) to verify the accuracy of the information that customers submit with policy applications and claims.
All claims are entered into the ICR, including those that are fraudulent. This enables insurers to identify applicants that are no longer eligible for insurance due to committing fraud. This also affects a person’s ability to get finance where a requirement of the lender is that the property purchased remains insured at all times.
State’s National Sales and Support Manager, Mike Tully reminds people that it’s not just the insurance industry that is hurt by fraud. “False statements in one part of the claim can put the whole claim in jeopardy. For example, if someone breaks into your home and steals $10,000 worth of contents and you claim for $500 of CD’s that you didn’t lose, the entire claim would be declined if the fraud was discovered”, says Mr Tully. State has a zero tolerance to any type of fraud and refers all fraudulent activity to the Police for prosecution.
Fraud and Security Risk Consultant for State Insurance, Paul Hurrell, comments: “There's a common misconception that insurance fraud is a victimless crime because insurance companies can cover the increased cost. This is simply not true. Recent figures show the impact fraudulent activity is having on the cost of individual policies and on the community in general”.
Ultimately, insurance fraud ends up hitting honest policy holders in the pocket as insurance premiums rise to contend with the costs associated with fraudulent actions.
A survey commissioned by the Insurance Council on attitudes to fraud among New Zealand policyholders found that four out of five people had heard of insurance fraud and one in five personally knew someone who had put in a false or exaggerated claim.
Generally 10 to 18% of claims have some sort of fraudulent aspect to them, whether by way of inflation or outright false claims. Contents and travel insurance policies are the most attractive targets for fraud, with health and motor insurance following closely behind.
In order to combat fraud, State has also launched an initiative for members of the public to report fraud. 0800 Fraudline has been operational for a year and has received over 70 reports of insurance fraud to date.
Everyone can play their part in combating insurance fraud in their community by using the insurance fraud hotline - 0800 FRAUDLINE (0800 372 835).