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Fraud – what is it good for? Absolutely nothing.

23/07/2018

Most people that make an insurance claim only seek compensation for the loss or damage they’ve suffered.  Like repairing a dropped iPhone or replacing a stolen laptop.  In other words, the stuff you expect an insurer to cover you for in a time of need.

Let’s now have a brief look at fraud and what it means to an insurance company and its customers.

What is fraud and who does it in insurance?

Fraud is wrongful or criminal deception intended to result in financial or personal gain.

The type of people that commit insurance fraud sit in two main groups.

Let’s start with the more headline grabbing element of insurance fraud. Highly organised crime syndicates that work with a purpose to make a profit from a claim.

These groups know that under the right conditions the insurance business is ripe for the picking.  And it’s clear they are having an effect to the tune of millions of dollars Australia wide.

These groups are taking money away from an insurance company which has varying impacts.  Stop for a second and imagine what those dollars are fuelling once they enter a criminal group. It becomes not just a business concern but a serious problem that affects all of us in the community.

Now let’s turn to the second and less talked about side of insurance fraud.  The land of normally good and honest people.  People that turn a blind eye to their own behaviour and end up committing a crime.

Most people wouldn’t dream of shoplifting from their local store.  So why do so many make an exception when it comes to insurance fraud?

Is it that people think that a big insurance company isn’t really a victim?  So it’s ok if they claim a bit more than they’re entitled to?  Maybe they justify their actions by thinking “I’ve paid lots of premiums and never made a claim, so I’m getting a bit more back now”.

The cost of fraud

According to the Insurance Fraud Bureau of Australia, fraud costs at least $2.2 billion every year[i].  That’s a lot of cash in anyone’s language.

The crime syndicates defraud millions of dollars.  That being the case, it’s clear the remainder of those billions come from lots of smaller bites at the cherry.

Those smaller bites come in the form of people claiming more than they’re entitled to. Everything from claiming for an item they never owned, through to changing the date an incident occurred so it fits into the insurance period. All of these examples are fraud.

Whilst small amounts of fraud seem harmless issues arise when it occurs thousands of times. Insurers absorb many of these dollars but this just leads to higher premiums.  If there’s one thing people don’t like, it’s increasing bills.

So what does Suresy do about fraud?

Considering the huge effect it has on the industry and community, Suresy takes fraud seriously. Through years of experience, our Claims Team have developed robust systems to detect and deter fraud.  At the same time, we’re mindful not to sacrifice giving our customers the experience they deserve.

It’s all about keeping the system fair for everyone.

[i] https://ifba.org.au/