A profile of an Aussie fraudster: Is your client making a bogus claim?

A profile of an Aussie fraudster: Is your client making a bogus claim?

A profile of an Aussie fraudster:  Is your client making a bogus claim? An in-depth report into household insurance fraud has revealed that the typical fraudster is likely to be aged 31-50 years-old, a first time claimant, and is most likely to submit a claim for under $900 for accidental damage to a computer, TV or mobile phone.

The report, undertaken by the University of Portsmouth, UK, for VFM Services, which recently launched in the Australian market, analysed almost 40,000 household insurance claims, assessed through its new ERA conversation management process, over the last five years in order to provide insight into the profile of those who may lie/exaggerate to their insurance company and to help clamp down on increasing levels of fraud.

The report dispels some widely held myths of what a fraudster looks like. For example, the study revealed that there was no difference between gender – both males and females were equally likely to defraud their insurance company whereas previous studies found that fraud was thought to be more prevalent in males.

Sally Griffiths, director at VFM Services said the profile of an opportunistic fraudster is no different in Australia than it is in the UK. The majority of fraudsters are opportunists either looking to bolster a genuine claim by exaggerating what was stolen or lost, or those who think they can simply get away with claiming for the odd TV or carpet.

However Griffiths said that although fraud costs Australian insurers around $2bn a year, “insurers appear to be reticent about investing in this low value fraud, partly due to the geographical issues unique to the Australian market, and so these claims regularly slip through the net”.

“This is a false economy and perpetuates the public’s view that fraud is acceptable.  It is important that the Australian industry warns opportunists that it is cracking down on those who think that what they are doing isn’t really illegal, or doing any harm to anyone. Fraud is not a victimless crime.”

Key findings of the study are:
•             The majority of claims were for accidental damage (82%), as the claimant doesn’t need to obtain a police report, unlike a claim for theft where the fraudster could face potential consequences such as perverting the course of justice, or wasting police time.
•             Just over 50% of claimants had submitted a claim within one year of buying the policy with just over 30% within six months. Therefore claims made within a year of the policy being taken out could be at higher risk for fraud.
•             There appear to be few ‘serial claimants’ with nine out of ten fraudsters having only made one previous claim or less, and just under three quarters of dishonest claimants had never made a claim before. This further supports the theory that most fraudulent claims are opportunistic.
 
 
3 Comments
  • Jak 26/03/2014 9:43:39 AM
    ..."All that is necessary for evil to succeed is for good men to do nothing", as Edmund Burke astutely observed, seems well and truly lost on too many insurers, and claims ataff who are badgered by codes or practice, consumer protection societies, and the concept insureds are all victims of unscrupulous insurers according to media and political pressure points.
    And the proofs and quantums required by the Courts via police to prosecute alleged offenders quarantees the activity will remain a victimless crime, of choice, and the frustration levels of claims staff will simply continue to gather.
    Worse; with the advent of no claim forms and no proposals, telephone sales and telephone claim lodgement, and the various pieces of legislation protecting consumers...insurers and legislators have bent over backwards to assist the fraudsters !
    One only has to work in claims, rather than spend time navel-gazing as an academic, to know that "cracking down" will generally be snookered by the IDR and/or FOS processes which facilitate 'commercial decisions' and make the insurer the victim.
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  • Ian J 26/03/2014 11:41:36 AM
    We had a client, who subsequently left our firm after 10 years - due to the large increases in both excesses and premiums after 4 years of excessive claims and told his new broker that he has never made a claim (naturally as a result of his lie, his new brokers premiums were set back to premiums even better than he had 3 years before). He had made claims through our firm in both company, business and of a personal nature. From travel claims of up to $10,000 (3 times), numerous high end home contents, jewellery (twice for exactly the same items and even event description), jet skis (as in plural at the same time), machinery stolen and not recovered, vehicles and even an entire rental property went suspiciously up in flames. Now I hear about a new claim he is making for TDP whilst I know he still works.
    In each case we have had discussion with the insurers, the assessors and the appointed investigators about our suspicions yet he still gets paid (whilst our loss ratios increase). Over $1.5 million in 4 years. Glad to see the end of him.
    Why wouldn't an insurer listen to a broker who has decades of experience and a greater personal knowledge and relationship with his client. We are not going to make accusations unless there may be some cause or reason to do so. Claims are why insurers exist so we can never begrudge someone using the policy for its intent, but when it is abused, as a broker, I become infuriated.
    Polar opposite, I had a client give me a cheque for $600 because he had found a Mont Blanc pen that he had claimed 7 months earlier (and paid for by CGU). Funnily enough CGU had no clue what to do with his cheque and they couldn't recall anyone doing what this client had done.
    I have, for a long time held the belief that the industry should establish some sort of national register for claimants. Brokers could register claims that may be of unusual, suspicious circumstance or clients making claims on a regular basis - it would take a great deal if input form a wide variety of industry peers and consumer groups but I do hold a strong belief that done correctly it would host a wide variety of benefits for the industry - the issue is how to establish something like it without prejudice.
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  • glenda 2/04/2014 10:21:27 AM
    Yes Ian i agree. numerous times i have had suspicions about claims and claimants which i have even expressed in writing (being careful of course not to make allegations but just express questions and "it looks to me as though... could be a possible scenario here" and i would strongly urge that this claim be investigated") but as Jak says "good men do nothing" and i say in reply to that "well then that makes them complicit surely by definition"
    and NO insurance fraud is not a victimless crime!! all insureds are paying for the cost/ loss.!!!
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