An Insurance Australia Group (IAG) claim involving a bedding factory fire has grabbed the industry's attention, reminding insurers of the impact of falling victim to fraudulent claims.
After Cassa Bedding’s factory was devoured by fire in August 2015, the business contacted IAG to file for an insurance claim worth more than $6 million to cover the destroyed property and business interruption. However, the insurance giant found the fire suspicious, so it rejected the claim and alleged that Cassa Bedding director John Cassimatis was behind the fire.
Cassa Bedding then took IAG to the Queensland Supreme Court in August 2016. According to the Australian Financial Review, which covered the case, Cassimatis told the police and fire investigators that he had left the factory between at least 25 minutes and up to an hour and a half before the blaze was reported around 9.25pm.
However, IAG's suspicion was finally confirmed this week when the Queensland Supreme Court ruled that the insurance giant was correct in rejecting the insurance claim.
Justice Martin Burns concluded that Cassimatis “repeatedly lied under oath,” adding: “On the issues that mattered to the outcome of this trial, [his account] was from almost start to finish a shameless concoction.”
During the investigation, it was revealed that a nearby electronic business's CCTV picked up the incident in the factory, showing that Cassimatis drove away in his car within a minute of the camera picking up the first signs of the blaze. The car's lights were first turned off but were soon switched on and then turned off again for 13 seconds as the director passed a train station.
The case highlights insurers' investigatory tactics when identifying fraudulent matters, including examining the fires, financial ties, and CCTV footage.
According to the Insurance Council of Australia (ICA), suspected fraud or inflated claims account for at least 10% of all claims, costing the industry hundreds of millions of dollars per year, with industry sources estimating that commercial insurance fraud is rarer.
Commenting on the bedding factory fire case, IAG said it might look into claims based on causes of damage or available evidence.
“Any alleged insurance fraud can have a wider impact on our business, our customers more broadly and the community. However, we balance these impacts with the importance of ensuring any investigation is done fairly and as quickly as possible,” the insurer said, as reported by the AFR.