| Summary: Not all insurance fraud looks like a staged crash or a forged document. Most of it is smaller than that: rounding up a genuine claim, leaving a detail off an application, or asking a tradesperson to bump up a quote. This blog looks at so-called “soft fraud,” why it still counts as a criminal offence in New Zealand, and why even small dishonesty adds up to real cost for everyone else. |
Your house gets burgled and a few genuinely stolen items get rounded up to a slightly higher value. When you take out contents cover, you forget to mention the garage door doesn’t quite lock. You ask your builder to write the quote a bit higher so it covers your excess. None of it feels like “real” fraud, the kind with staged crashes and forged paperwork. But all three are exactly that, and they’re far more common than the dramatic cases that make headlines.
What Is “Soft Fraud”?
Insurers sometimes split fraud into two broad categories. “Hard fraud” is deliberate and premeditated: staging an accident, faking a theft, inventing a loss that never happened. “Soft fraud,” sometimes called opportunistic fraud, is different. It’s a genuine claim or a real policy, with a bit of dishonesty layered on top, usually to get a bigger payout or a cheaper premium. It’s less dramatic, but it’s still fraud, and it’s the more common of the two by a wide margin.
The Everyday Examples
Soft fraud tends to show up in a few recognisable ways:
- Claim padding — adding extra items, or a higher value, to a genuine theft or damage claim. The loss is real; the amount claimed for it isn’t.
- Application misrepresentation — leaving a driver off a policy, giving a false garaging address, or downplaying a property’s condition to get a cheaper premium.
- Excess padding — asking a repairer or tradesperson to inflate their quote so the extra covers your excess, meaning you pay less, or nothing, out of pocket.
What links all three is that they start from a real claim or a real policy. That’s often exactly why people don’t think of them as fraud at all, they’re not inventing a loss, just adjusting the numbers a little. Insurers, and the law, don’t draw that distinction.
Why It Still Counts as Fraud
Once a claim or application includes false information, it’s fraudulent, regardless of how small the exaggeration is or how genuine the rest of the claim was. The consequences are the same too: a declined claim, a cancelled policy, and in more serious cases, prosecution. Our own Fraud Survey found that while 72% of New Zealanders correctly expect a declined claim and 70% expect it to be harder to get insurance in future, only 52% realise a criminal conviction is actually a likely outcome. That gap in understanding is exactly where “it’s only a small lie” thinking tends to come from.
The Fallout Doesn’t Stop With You
One thing people rarely think about is who else is on the policy. A lot of cover in New Zealand is held jointly: a couple’s contents policy, a shared car, a family home. When a claim is declined or a policy cancelled for misrepresentation, that decision usually applies to the policy itself, not just to the person who filled in the form. A partner or spouse can lose the same cover at the same moment, often without having known anything about it.
It tends to follow them afterwards, too. Insurers routinely ask whether an applicant has ever had insurance declined, cancelled or refused, and on a joint policy that history sits against both names. Someone who had nothing to do with the dishonesty can end up explaining it every time they apply for cover, paying more for it, or being turned down. If the claim is investigated, they may also be the one being asked to account for figures they never inflated. A “small lie” on one form can quietly become someone else’s problem for years.
Why This Matters to Every Policyholder
Soft fraud is common precisely because it feels low-risk. Our Fraud Survey data backs that up: 61% of Kiwis believe inflated claims for lost or stolen items are common, and 55% see misrepresentation or non-disclosure as a frequent issue in claims. It adds up. Every padded claim and every under-disclosed application is still paid out of, or priced against, the same shared pool every policyholder contributes to. Our data shows 66% of New Zealanders already understand fraud pushes premiums up for everyone, and 63% recognise it slows down genuine claims, because insurers have to look more closely at all of them as a result.
It’s also worth reading alongside our recent piece on why insurers ask so many questions during a claim. The scrutiny that can feel frustrating for an honest claimant is largely there because of exactly this kind of “small” dishonesty, not despite it.
If you’ve been asked to inflate a claim, pad a quote, or leave something off an application, you don’t have to go along with it, and you don’t need proof to raise a concern. Report it confidentially and anonymously at ifb.org.nz/report-fraud.
Frequently Asked Questions
What is soft fraud?
Soft fraud, also called opportunistic fraud, is dishonesty added to an otherwise genuine claim or policy, such as inflating the value of a real claim or leaving out a detail on an application. It’s less premeditated than staged or invented claims, but it is still a criminal offence.
Is it really fraud if the claim itself is genuine?
Yes. Adding false information to a genuine claim, such as claiming for items that weren’t actually lost or damaged, still meets the legal definition of fraud in New Zealand, even if the underlying loss was real.
Can I ask my repairer to raise their quote to cover my excess?
No. Asking a repairer or tradesperson to inflate an invoice so it offsets your excess is a form of insurance fraud, and it puts both you and the repairer at risk of a declined claim, a cancelled policy, or prosecution.