Insurance fraud may seem like a minor issue to some, but the reality is very different. It costs all of us, not just insurance companies. Unfortunately, a number of myths persist that downplay the seriousness of insurance fraud in Aotearoa.
“There’s a dangerous misconception that insurance fraud is harmless or somehow justified, but the reality is, it costs honest New Zealanders hundreds of millions of dollars each year. At the IFB, we work closely with insurers, and the wider community to ensure these crimes are detected and deterred. Fraud is not a victimless crime, and it’s critical that we challenge these myths to protect the integrity of our insurance system.”
— Yvonne Wynward, Manager, Insurance Fraud Bureau, NZ
Here are some of the most common misconceptions, and the facts that debunk them.
Myth 1: “It’s a victimless crime”
Reality: Fraud hurts everyday New Zealanders.
When someone commits insurance fraud, whether it’s inflating a claim or faking a theft, the cost doesn’t stop with the insurer. These losses are passed on to all policyholders in the form of higher premiums. Honest Kiwi families end up paying more for their cover because of the actions of a dishonest few. For instance in 2024, there were 698,239 motor vehicle claims lodged across New Zealand. Of these, 79,250 were identified as potentially fraudulent, representing more than 11% of the total motor claims volume. The estimated financial cost of these fraudulent claims reached a staggering $216,772,140.
Myth 2: “Insurers can afford it”
Reality: Fraud reduces trust and increases costs across the industry.
While insurers do manage risk, fraud places unnecessary financial pressure on the entire insurance system. The more fraud that occurs, the more insurers must invest in investigation, claim scrutiny, and fraud prevention, which ultimately affects how much all customers pay and the level of service they receive.
Myth 3: “Everyone does it — it’s no big deal”
Reality: Fraud is a serious criminal offence.
It might seem harmless to stretch the truth on a claim, but insurance fraud is illegal. Whether it’s staging a car accident or lying about the value of stolen property, it’s deception, and it’s taken seriously by both insurers and law enforcement. Convictions can lead to fines, a criminal record, or even imprisonment. Interestingly data from our latest fraud survey shows that trends over time show a gradual decline in the perceived consequences for perpetrators of insurance fraud since tracking began in 2020. While the most recognised penalty remains claim denial, belief in this consequence has dropped from 84% in 2020 to 72% in 2024. This was especially true among younger respondents. If you’ve seen insurance fraud, you can lodge an insurance fraud report now.
Myth 4: “It’s just bending the rules”
Reality: There’s a clear line between a genuine claim and fraud.
Claiming for something that didn’t happen, adding extra items to a loss, or exaggerating damage is not bending the rules, it’s crossing the line. Fraud undermines the integrity of the insurance system that exists to protect people when they genuinely need help. Recently a couple’s car insurance claim was declined, and their policies cancelled, after they made false statements about how the damage occurred. While they thought they were just bending the rules, the insurance company thought otherwise.
Myth 5: “If no one checks, what’s the harm?”
Reality: Fraud detection is improving — and consequences follow.
The Insurance Fraud Bureau (IFB) works with insurers to detect and investigate suspicious claims. Technology and data sharing have made it easier than ever to identify fraud. Those caught may lose cover, be prosecuted, or face difficulty obtaining insurance in the future. We support insurance companies to investigate claims thoroughly, so it pays to stay honest.
Help Keep Insurance Fair for Everyone
Insurance fraud may seem like a shortcut or harmless loophole, but it’s far from it. The ripple effects of insurance fraud in New Zealand touch everyone, from families struggling with rising costs, to honest claimants whose cases are delayed or questioned because of others’ dishonesty.
Seen something suspicious? Do your part. Report Insurance Fraud
Help protect honest Kiwis by reporting suspected insurance fraud confidentially to the Insurance Fraud Bureau. Report fraud now.