IFB Fraud Survey Observations and Trends in 2022 and 2023
Every year, the Insurance Fraud Bureau conducts a survey amongst its insurer members to understand some of the fraudulent trends that investigation teams are experiencing. This year, we wanted to share the top five observations and trends that are prominent.
1. Fraudulent Motor Insurance claims dominate
Of the fraud trend statistics, staged vehicle accidents are becoming the fastest emerging fraud typology. Insurers are detecting a number of claims involving vehicles which appear to have been over-insured. These tend to be European brand vehicles with agreed values considerably higher than the average value of such vehicles. Some customers have been quite open about having insured the vehicle for more than they paid for it.
2. Insurance claims being lodged close to policy inception
Another trend that Kiwi insurers are seeing is the application for an insurance policy, and a claim being made soon after they have it. In challenging economic environments, this type of insurance fraud isn’t unexpected. It is likely that claimants suffer a loss, but because they have no cover, a policy is taken out and a claim lodged within 14 days of the policy. Weather events that hit the North Island in early 2023, saw an increase in insurance claims being lodged in close proximity to taking out a policy.
3. Maximising refund of premiums
Most commonly seen in Auckland, there has been an increase in insurance customers over inflating their sum insured, to maximise the refund of their premiums. It is believed that our digital insurance technologies have been slow to pick this trend up, but the insurance industry is now identifying these at point of policy application.
4. Claims for multiple electronic devices
Suspicious claims have long been made for electronic devices, soon after a new version device is publicly available for sale. However, the insurance sector is seeing an increase in claims for multiple devices in one claim. For example, claims that a laptop, tablet and phone were all dropped at the same time, and damaged.
Insurers have the ability to check consistency of damage, dates of last use and other suspicious claims. It is often found that the devices are damaged, but not at the same time.
5. Insurers subject to cyber breaches and scams
Unsuspecting consumers aren’t the only ones to be targeted by scammers. We’ve had reports of scammers approaching some insurers for ‘delayed’ claim payments and requesting that payment is made to an alternative bank account.
Insurers are aware of this and their staff are being made aware of these requests, especially from suppliers or insurance brokers, requesting payments be made to new bank accounts, and ensuring that the correct verification checks are completed.
Insurance brokers should be aware that they can be the target of scammers, and to ensure they practise optimum cyber security practices.
Insurance fraud observations and trends are important for the insurance industry to share information and collaborate on tightening their processes and reducing these types of insurance fraud. They work closely with their internal investigators, the police and other parties within the justice system to make sure that insurance fraud is less appealing to perpetrators.
While vehicle insurance fraud remains high, with staged accidents and fake stolen claims increasing, suppliers to the industry such as insurance brokers also need to be mindful of insurance scams. Insurers also need to be mindful of their customer over insuring items and premium refund schemes.
It is great to see fraud investigators finding that tip offs from the public are playing a valuable role in the detection process of fraudulent claims. The first 6 months of 2023 have seen almost 200 reports of fraud to the IFB website.
2023 will see insurers continuing to be vigilant for the warning signs of insurance fraud:
- Inconsistencies between the original and subsequent explanations of the loss,
- Multiple, simultaneous claims,
- Non or partial disclosure of criminal history,
- Financial pressures and/or mental health issues.
Concerned about insurance fraud?
Insurance fraud is not a victimless crime; it’s a crime that all policyholders pay for. You can report insurance fraud by visiting the IFB website. Reports can be made anonymously.