Every year, the Insurance Fraud Bureau (IFB) conducts a survey (rangahau) among some of its insurer members to gauge an awareness and understanding of the types of insurance fraud within the industry. This year, the survey has revealed critical observations and trends that highlight the ongoing challenges and emerging patterns in insurance fraud. We want to share the top 5 findings from this year’s research to keep you informed and vigilant.
Economic Hardship and Rising Fraudulent Acts
History has shown us that economic hardship often correlates with increased mental health stressors and fraudulent activities. The financial pressures since the COVID-19 pandemic and the subsequent economic environment have likely contributed to a rise in fraudulent behaviours. Here are the key observations from the 2023 survey:
- Claims Lodged Close to Policy Inception
- There has been an increase in claims being lodged shortly after policy inception. This behaviour suggests that policies may be lapsed or cancelled, and a new policy is taken out retrospectively after a loss event occurs. This dishonest act, aimed at saving money, is considered fraudulent and can result in all policies being cancelled, leading to severe consequences.
2. Increase in False Documents
- The submission of false documents as proof of purchase has risen over the past year. Insurers have noted a significant uptick in fake receipts and other fraudulent documentation, complicating the claims process and undermining trust in the system.
3. Non-Disclosures and Double-Dipping
- There has been a notable increase in non-disclosures and double-dipping, particularly with jewellery claims. Instances where similar claims are made with multiple insurers without declaring the previous claims have become more frequent. Some of these cases involved fake proof of purchase receipts from wholesalers, indicating sophisticated fraud attempts.
4. Higher Agreed Values and Organised Fraud
- Leveraging higher agreed values has become the most prevalent fraud typology, with occurrences increasing from a few per month to several per week. At least three identifiable organised groups are actively exploiting these opportunities. This trend is partly due to the shift towards online policies and claims, where fewer questions are asked, and customers feel more confident providing incorrect information.
5. Vehicle Fraud and Staged Accidents
- Vehicle fraud remains a significant concern, with a noticeable increase in cases, especially in the current economic climate. Staged accidents continue to be a problem, as fraudsters attempt to exploit insurance policies for financial gain.
Conclusion
The insights from the 2023 Insurance Fraud Bureau survey underline the ongoing and evolving challenges in combating insurance fraud in New Zealand. By staying informed about these trends and understanding the common tactics used by fraudsters, New Zealanders can help protect themselves and contribute to a more robust and trustworthy and affordable insurance industry. Public awareness and prompt reporting of suspicious activities are crucial in maintaining the integrity of our insurance system. Together, we can reduce the cost of insurance for all and ensure a fair and reliable market for everyone.