Cost of ‘dodgy’ claims revealed

Cost of ‘dodgy’ claims revealed

Cost of ‘dodgy’ claims revealed Fifty per cent of all claims in Australia are suspected to be fake or exaggerated, incurring the industry an estimated $2.2 billion in annual losses.

KPMG revealed that home and contents insurance is “rife” with insurance fraud, with vehicle claims coming a close second in terms of volume of false claims.

A survey by online research company Finder has found, meanwhile, men are twice as likely to commit insurance fraud as women, and professionals twice as likely as blue-collar workers.

“There is an enormous amount of insurance fraud that is undetected but I would say half of home and contents claims submitted include some element of fraud,” said KPMG insurance partner Scott Guse, as quoted in The Herald Sun.

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“The most common fraud is after theft or damage at home. People feel aggrieved that they’ve been robbed or their home has been damaged and while they are grateful to have insurance they resent paying the excess.

“Most people, at least 50%, add on something additional to the claim, something that wasn’t taken, to offset that $500 or $1,000 out-of-pocket cost. What they don’t realise is, if the false item is discovered, the insurance company can reject the whole claim.”

Another common subject of fraudulent claims was vehicle damage. Guse said people use hammers and golf balls wrapped in socks to increase the damage to their cars in order to get the car written off or expand the area and extent of the repairs.

Annual payout for fraudulent claims by insurance companies was placed at roughly $2.2 billion.


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Brokers offer ‘starting point’ in fraud detection
3 Comments
  • RickD 28/03/2017 5:42:20 AM
    In the interests of balanced reporting how about siting the study or estimate of fraud perpetrated by the insurance industry as a whole. Not paying legitimate claims, finding ways to nickel and dime the insureds, using deck stacking factors like credit scores, pre existing conditions, genetic information,fraudulent products, fraudulent rating agencies, the list goes on and on. Do you think it would be less or more than 50% ?
    Do you think there is a correlation?
    Can you blame people for trying to get a little of their own back?
    Post a reply
  • D 30/03/2017 4:26:29 PM
    So if I purchase a Personal Accident policy that excludes pre-determined conditions, then try to make a claim on that same condition I intentionally did not disclose, the claim then gets rejected... - That's Deck Stacking according to RickD.
    Post a reply
  • exbroker 6/04/2017 2:10:39 PM
    "Claims coaching" would also contribute to this. After a long career with insurance companies I did a stint with a broker and "claims coaching" was rife. An event would happen and the broker would find a way of wording it that fitted the policy rather than just presenting the facts for consideration. It was bad enough to make me leave the organisation and broking as I wasn't willing to do the same.

    Admittedly my broking experience is only with one organisation but I'm curious about how common this is. Have any more experienced brokers out there come across this?
    Post a reply