Insurance fraud isn’t an issue that’s had much public discussion over the last few years, but it is one those within the industry have been paying close attention to. At current estimates, insurance fraud is believed to have cost the general insurance sector up to $614 million in 2018. That’s around 10% of gross written premiums and represents a substantial amount of money that costs every customer.
No matter who you are, if you’re paying for insurance, then you’re paying for insurance fraud. A portion of honest policyholders’ premiums every year goes directly into paying claims that have been made through deception, dishonesty and dissimulation.
That’s why we’ve created the Insurance Fraud Bureau, the first cross-insurer initiative of its kind in New Zealand. The Insurance Fraud Bureau, or IFB, will work with all ICNZ members to deter and detect general insurance fraud in New Zealand. It will do this by educating New Zealanders about insurance fraud, providing a central point of contact for general insurance fraud issues and allegations of insurance fraud, developing a centre of excellence for anti-fraud initiatives, researching national and international trends, developing strong multi-agency relationships and analysing and working with insurance fraud data in New Zealand to help find and reduce instances of insurance fraud.
The IFB’s biggest role will be in educating everyday New Zealanders about what insurance fraud actually is and what engaging in it could mean for policyholders. It’s only a small percentage of people who commit insurance fraud, but many of them do so in the belief that it’s the normal thing to do.
“I’ll just add a bit extra to get back what I’m owed.”
“It won’t hurt anyone if I say my TV was a couple of years newer than it actually was.”
“I know I lost my necklace at the beach, but I’ll say it was stolen when my car was broken into. Nobody will know the difference.”
“It’s not relevant that I was charged with drunk driving a few years ago; I just didn’t realise how much I’d had to drink.”
These are the sorts of things people say to themselves to rationalise their behaviour. But it isn’t rational and it’s hitting every other insured person in New Zealand right in the pocket. And if those who do it are caught, among other things, they could lose their ability to get insurance permanently.
The IFB will set up a fraud working group across ICNZ members to share intelligence in combatting fraud. It will also develop close links with IFB counterparts in Australia and the UK.
Brokers can also play a part. We need your help in getting this message out. Talk to your clients and explain to them the cost and consequences of insurance fraud. Help them understand that it’s not common and it does have victims – like their mum and their grandad and their neighbour. Walk them through what could happen to them if they’re caught. We have resources that can help with this on our new website: www.ifb.org.nz.
Ultimately, insurance fraud is an issue we all need to care about. Through care and attention, and effective public education, together we can reduce the burden on all policyholders.