Recession driving increase in insurance fraud

Get robbed on Monday. Buy insurance on Tuesday. Get busted on Wednesday.

The latest recession-driven trend in insurance fraud is for uninsured people to take out a policy after being burgled and then claim for the losses.

New Zealand Insurance Council spokesman Terry Jordan said insurers have reported an increase in people trying to take out insurance and claim for previous thefts.

It may be on the rise because during the financial crisis people have tried to save on insurance but later found they needed it. "Or it may just be an extension of crime into insurance," Jordan said.

"It's seen as a victimless crime. That couldn't be further from the truth. One of the issues with this is that everybody pays for insurance fraud."

He said fraud was thought to cost the country between $150 million and $300m a year.

Private investigator Ron McQuilter of Paragon Investigations, said more people are trying to get away with fraudulent insurance claims. And they are getting caught as insurance companies and police crack down on fraud.

McQuilter said it was easy to detect dishonest claims, particularly if they were made immediately after a policy was taken out.

Companies and police were coming down hard on insurance fraudsters. "We're seeing a lot more insurers prosecuting people for fraud. That's been a big change. Before, [investigators] would get all the evidence but the insurer and the police wouldn't bother."

Paragon investigated more than 2000 insurance frauds over the past two years.

Jordan said claims staff were being trained to spot fraud and were getting better it. "Insurance companies have a zero tolerance for this."

- © Fairfax NZ News