COVER STORY
CRACKDOWN ON FRAUD
The battle lines have been drawn in the insurance industry’s war against insurance fraud with the establishment of a new Insurance Fraud Bureau set up by the Insurance Council. But just how common is insurance fraud? And what kind of scams have people been getting away with? By Angela Cuming
O
n the surface it seemed innocent enough. A woman on a family holiday in Fiji said she went to the beach and lost her iPhone and her ring. The iPhone had fallen out of her pocket, she told her insurer, and the ring must have slipped off her finger in the water. The insurer asked for proof of ownership of the ring, and a photograph of what was claimed to be the woman’s hand wearing the ring was supplied. Only it turned out the photo was identical to one taken from an American wedding website. The claim was denied. That small but not insignificant bit of fakery is one of thousands of false claims insurers deal with each year, claims that cost companies time and money to deal with. The Insurance Council estimates, based on overseas research, that as many as 10% of insurance claims could be fraudulent, causing losses of up to $614 million a year. That’s led the Insurance Council to declare open season on fraudsters, setting up a new Insurance Fraud Bureau (IFB) to wage war on fake claims by bringing all of ICNZ’s members together to combat insurance fraud. “We want to make people aware that they are cheating everybody else and it’s a cost on everybody,” says ICNZ chief executive Tim Grafton. The newly-formed IFB’s network will cover over 95% of New 32
December 2019
Zealand’s general insurance sector. Grafton says its primary purpose will be to educate New Zealanders about insurance fraud and provide a central point of contact for all insurance fraud issues. It will also gather hard data about the prevalence, cost and patterns of insurance fraud in New Zealand. ICNZ’s Insurance Claims Register (ICR) manager Yvonne Wynward has been appointed manager of the IFB. She says the biggest challenge to face at present is trying to quantify how much fraud is being detected. “The IFB over time will collect data from members to give a more accurate picture of detected fraud,” says Wynward. Members of the public will also play their part in the fight against fraud. The bureau has a freephone number and an email address for tip-offs, with people encouraged to pass on information if they suspect someone else is trying to lodge a false claim. “If tips relate to large-scale fraud, terrorism or organsised crime they will be passed onto police,” says Wynward. “But most ICNZ members have their own in-house investigations teams who will gather evidence and undertake investigations before giving to the police for prosecution.” Insurance fraud affects all policyholders, says Wynward, because the more fraud that is committed, the more it costs the insurer and the costs are passed onto the policy holder.
