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Insurance Fraud Detection Techniques in New Zealand Exposed

The Insurance Council of New Zealand (ICNZ) has launched its own fraud bureau to tackle the estimated annual cost of insurance fraud, which it believes could be as high as $614 million. ICNZ chief executive Tim Grafton outlined some common patterns of insurance fraud and warned that claimants who engage in fraudulent activity may face severe consequences.

Common Patterns of Insurance Fraud

Insurers have identified certain telltale signs of fraud, including:

• A sudden increase in claims for theft or breakages of new gadgets
• The addition of lost or stolen items to claims
• The convenient appearance of items on online marketplaces after a claim has been made

“We want people to be aware not to go down that street,” Grafton said.

Motivations Behind Fraudulent Claims

The motivations behind fraudulent claims can vary, but often involve disgruntlement with the insurer. ICNZ’s role is to educate policyholders about the impact of fraud and dispel the perception that it is a victimless crime.

“I have no doubt that there is an issue around a minority of people who feel they are entitled to exaggerate their claims,” Grafton said.

Impact on Policyholders

Insurance & Financial Services Ombudsman Karen Stevens agreed, noting that fraudulent claims often involve motor vehicle, contents, and travel policies. She warned that both “soft” and “hard” fraud can affect premiums for other policyholders, making it essential for claimants to think twice before attempting to make a fraudulent claim.

Examples of Fraudulent Claims

Stevens provided several examples of fraudulent claims, including one instance where a person claimed for a new laptop after spilling coffee, only to have a technical expert reveal that the laptop had not been used in over a year.

“While some of this kind of thing is on a reasonably minor level, people should think first before trying to do something like that,” Stevens said.

Reducing Fraudulent Claims Costs

Grafton believes that reducing fraudulent claims costs could positively impact premiums, but noted that it is difficult to predict how effective the ICNZ’s fraud bureau will be in achieving this goal.

“What we’re doing is sending the signal that insurance fraud is not a victimless crime, you are cheating other people,” Grafton said.

Conclusion

The launch of the ICNZ’s fraud bureau marks a significant step forward in the fight against insurance fraud in New Zealand, and serves as a warning to policyholders who may be tempted to engage in fraudulent activity.