As the cost of living continues to rise and economic pressures mount, the insurance sector is seeing a worrying rise in fraudulent activity across multiple product lines. Results released last month from the 2024 Annual Insurance Fraud Survey, now in its fifth year, reveals consistent trends and new insights into how, where, and why fraudulent claims are being attempted.
This latest report aggregates data from participating insurers across the country, shedding light on the behaviours behind claims and highlighting areas that demand continued vigilance. In this blog we share the common trends and observations highlighted by our participating members.
Financial Pressure-Driven Desperation
It is clear to the investigators that some of the fabricated losses, over-inflated values, and high-value losses have been the result of desperation due to the financial pressures attributed by the cost of living and the general economic climate. Insurers have stated that usually upon further probing, the customer will generally try and withdraw a false claim.
Economic hardship appears to be a strong underlying driver in many fraudulent claims. Insurers noted a spike in:
- Fabricated losses, especially involving jewellery, vehicles, and high-value items
- Inflated claim values, particularly for items of sentimental or perceived high worth
- Late payments and overdue premiums, indicating financial distress at the time of loss
- Stolen vehicle reports where evidence didn’t support the claim
- Attempts to withdraw false claims once investigations begin
In one standout case, a policyholder claimed $23K in missing jewellery—only to later admit the items had not been lost after all. The insured advised that due to pregnancy and her swollen fingers, she had placed her jewellery in her linen cupboard for safe keeping. The value of the items was approximately $23K. One year later she went to retrieve the jewellery for a birthday party, and they were gone. An external investigator was appointed. After the interview, the insured sent an email advising that due to pain medication she was taking she had not been quite accurate with her account of the facts. The claim was subsequently withdrawn.
Claims Lodged Close to Policy Inception
Claims lodged close to policy inception continue to occur. The assumption here being that policies are either lapsed or cancelled, then a loss event occurs. However, due to no cover, a policy is taken out and claim lodged shortly after the policy was incepted. This has been particularly prevalent over the past couple of years.
- In many instances, cover was purchased shortly before an alleged loss
- These included vehicle accidents, theft, and property damage
- Often, the claimants failed to disclose recent similar incidents or previously declined claims
Such timing raises red flags and increases the likelihood that the loss either occurred before coverage began—or was fabricated altogether.
Motor Vehicle-Related Fraud
Throughout 2024, insurers have reported a rise in staged vehicle crashes and a surge in stolen car claims dominating investigations. Adding to the concern, organised groups of wreckers have become increasingly active, offering cash for vehicles—sometimes up to $10,000—through platforms like Facebook Marketplace, highlighting a growing trend of coordinated fraudulent activity in the motor vehicle space.
- Staged accidents: collisions carefully planned to appear legitimate
- Restricted licence breaches: incidents tied to drivers in breach of licence terms
- False vehicle damage claims, such as paint transfers and altered crash narratives
- Deliberate damage to force a write-off, including placing sand or stones in engines
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Lies & Forgeries
One illustrative example from the 2024 report highlights how seemingly minor claims can unravel into serious fraudulent behaviour. A policyholder lodged a claim for a handbag allegedly stolen from her car, which also included high-value items like an iPhone and wedding rings in the loss schedule.
However, during the investigation, the claimant confessed that the iPhone had never been stolen and remained in her possession at the time of the interview. She had attempted to quietly withdraw the phone from the claim once it was referred for investigation. Further inquiries revealed that she had made no effort to verify the whereabouts of the wedding rings or consult her partner before including them in the claim.
Compounding the issue, a text message produced during the investigation confirmed the rings had been purchased for significantly less than what was claimed. Additionally, the jeweller confirmed that the certificate of sale provided had been forged.
This case underscores a troubling trend: some claimants are not only exaggerating losses but also resorting to document falsification in hopes of financial gain.
Looking Ahead
As insurers, investigators, and policyholders, the shared goal must be transparency and trust. While the majority of claimants act honestly, the minority who fabricate stories, misrepresent facts, or exploit policies undermine the system for everyone else.
If you’re making a claim, be honest, provide full information, and understand that fraud carries consequences far beyond a declined payout.
Together, we can protect the integrity of insurance in Aotearoa. Report fraud now.