In recent years, New Zealand has experienced a significant rise in insurance scams, driven by global trends and local economic factors. As fraudsters become more sophisticated, it’s crucial for New Zealanders to be aware of the risks and take steps to protect themselves from falling victim to these schemes. This post will outline some of the most common scams targeting New Zealanders, red flags to watch for, and preventive measures to safeguard your finances and personal details.
Types of Insurance Scams in New Zealand
Insurance fraud in New Zealand comes in various forms, with scammers constantly evolving their tactics. Fraudulent activities increase during times of crisis, for example, following natural disasters like Cyclone Gabrielle, which left many New Zealanders vulnerable as they processed insurance claims.
Here are some of the most common scams:
- Invoice Scams: Scammers hack into legitimate businesses’ email systems and modify customer invoices to reroute payments to their own bank accounts. For instance, after natural disasters, scammers may pose as tradespeople or repair services, offering immediate but fraudulent solutions.
- Investment Scams: After receiving insurance payouts, some individuals seek to invest their funds. Scammers exploit this by offering fraudulent investment opportunities, often guaranteeing high returns with low risk. These schemes lure victims by claiming to be from legitimate financial institutions or investment firms.
- Claims Lodged Close to Policy Start Date: In some cases, individuals take out policies after a loss event occurs and lodge claims immediately. This is a form of opportunistic fraud that can have severe consequences, including the cancellation of all policies and legal ramifications.
- Non-Disclosures and Double-Dipping: Some scammers make multiple claims across different insurers for the same loss or fail to disclose critical information, such as previous claims. This dishonest practice can lead to steep fines and policy cancellations.
Red Flags to Watch For
To protect yourself from falling victim to an insurance scam, be vigilant for the following warning signs:
- Unsolicited Offers: If you’re contacted out of the blue with an offer to invest your insurance payout or you receive an invoice for a service you didn’t request, be suspicious. Verify the legitimacy of any correspondence by contacting the organisation directly through official channels.
- Pressure to Act Quickly: Scammers often create a sense of urgency to push you into making quick decisions, such as paying an invoice or transferring money. Legitimate companies rarely pressure customers to act immediately.
- Too-Good-to-Be-True Offers: Whether it’s a guaranteed return on an investment or a heavily discounted repair service, offers that seem too good to be true often are. Always research the service provider and ensure they are licensed and reputable.
- Unverified Contact Details: If an invoice or email contains new or unexpected contact details, verify them with the company’s official website. Scammers often alter bank account numbers to reroute payments.
Preventive Measures
While insurance scams are increasingly sophisticated, there are several steps New Zealanders can take to avoid falling victim:
- Verify the Source: Always double-check the legitimacy of any email or message you receive, especially if it asks for payment or personal information. Call the company using a trusted phone number from their official website, not the one provided in the suspicious message.
- Check Credentials: Before investing or hiring a service provider, ensure they are licensed by New Zealand’s Financial Markets Authority (FMA) or other relevant authorities. This simple step can help you avoid investment scams and rogue tradespeople.
- Stay Informed: Regularly update yourself on the latest scam tactics. Banks and insurance companies frequently update their websites with information on current scams. Being aware of new trends can prevent you from falling into a trap.
- Use Secure Payment Methods: When paying for services or making an investment, use secure methods, such as verified bank transfers or credit cards, which often offer some level of fraud protection. Avoid paying in cash whenever possible.
- Monitor Your Accounts: Keep a close eye on your bank and insurance accounts. Report any suspicious activity to your bank or insurer immediately, as prompt action increases the chance of recovering lost funds.
Insurance scams in New Zealand are becoming increasingly sophisticated, but with awareness and caution, you can protect yourself. Stay informed about the latest trends, verify the legitimacy of incoming emails, offers or requests for payment, and never rush into decisions, especially when it comes to your finances. By following these steps, you can reduce your risk of falling victim to a scam and help ensure that the insurance system remains fair and reliable for everyone.
Concerned about insurance fraud?
Insurance fraud is not a victimless crime; it’s a crime that all policyholders pay for. It’s critical to tell the truth about what’s happened when making a claim. You can report insurance fraud anonymously on our website.