The more stringent an insurance claims procedure is, the greater the likelihood overall claims costs may reduce honest policyholders annual insurance quotation.
Home insurance fraud is not a new phenomenon. However, in times of austerity and increasing premiums,
fraud tends to rise. Insurance fraud is a crime. Since its main aim is to gain benefit from an insurance policy that would otherwise not be due to the policyholder. Home insurance fraud tends to centre on claims for accidental damage to buildings or contents, or losses and damage to high value items, (such as jewellery when taken out of the home by the policyholder).
For example, accidental damage to carpets, (where paint has been spilt) may well be a legitimate claim for the majority of cases. However at times, policyholders may find that a legitimate claim can be exaggerated for the benefit of having new carpets in more than one room, if the paint has somehow managed to be spilt and dripped from a lounge to a hallway. Or perhaps the paint spill occurred in up upstairs landing and then tin was ‘accidentally’ knocked all the way down a flight of stairs, ruining the hallway and stair carpet.
In other cases, claims may be more than just exaggerated – they might be completely made up, (such as the loss of jewellery items when being worn by the person and they slip off into a drain and cannot be found). In both of these types of examples however, Home insurance companies are more than aware of the possibility of fraud. In fact, they may well assume they are fraudulent in the first instance until proof is obtained that they are in fact legitimate or exaggerated.
Insurance companies claims departments have varied methods for obtaining proof that a claim is in fact genuine. Likewise, they are geared up to proving that a claim may be an act of fraud.
If home insurance policies have just been taken out and a claim occurs within a month, some insurance companies will automatically place dealing with that claim in the hands of a more experienced claims handler. Alternatively, or depending upon the
value or nature of the claim, they might even pass the claim on to a specialist
loss adjuster, who will investigate the claim in depth, conducting interviews
over the telephone or in person with the policyholder. Another trigger for an
insurance company, will be if the policy has had a run of similar claims in its
recent history. This will be an automated trigger. Again, the claim will be
passed to a more experienced handler who will use desktop type background checks
on the previous claims.
Detail of claims and incidents are shared between insurance companies, and
therefore a would-be fraudster, is unable to escape detection simply by making a
claim and then swapping insurance companies in the subsequent years, only to
make further claims. If a prospective policyholder does not divulge
previous claims or
incidents when taking out the policy in the first instance, then losses will
show up using the shared data between insurance companies. Not divulging claims
information at the point a policy is taken out is an offence. It is often a
condition of the home insurance policy contract to divulge such information.
Failure to do so may result in the policy being made void, rather than full
fraud investigations being carried out.
More advanced techniques for assessing if claims are genuine or not are
available to insurance companies. These include voice recording, (that measures
stress levels in respondents voices), and /or advanced questioning techniques.
These use computer programmes to analyse the answers. A claim can be lengthened
in duration quite significantly, if one of these programmes is used. Insurance
companies will use all methods available to them, to justify paying a claim that
it initially processed as potentially fraudulent.
Clearly, by the very nature of the crime of fraud, insurance companies cannot
label a claim as fraudulent until having clear evidence of such. The burden of
proof rests with the insurance company to prove fraud. However, all genuine
claims must be evidenced by policyholders, providing receipts and proof of
damaged items, detailing that the police were advised of thefts and losses at
the appropriate times.
When claims processes are lengthened in such a way, as to not make it easy
for the would-be fraudster to defraud the insurance company, a positive result
for the insurance company is that the would be fraudster withdraws their claim
and nothing more is heard of them. In this way, the insurance company has saved
money, kept claims costs down, and in turn, saved its honest customers money, by
not having to increase premiums across the board to due to spiralling claims
costs that are not genuine.
We hope this article has helped.