The term insurance fraud covers a range of issues and can be deceiving to some people.
It can include the exaggeration of otherwise legitimate claims, intentional misrepresentation of the facts or complex organised manipulation of the claims process to gain a financial advantage where there been no actual loss.
Opportunistic vs. premediated insurance fraud
The most common form of insurance fraud is the exaggeration of personal claims – this is referred to as ‘opportunistic fraud.’
Premeditated or planned frauds are usually committed by the professional fraudster and often by organised criminal gangs.
A serious crime
Regardless of whether the fraud is committed on a one-off basis (opportunity) or is a series of frauds committed by a professional criminal (pre-meditated), it is still considered at law to be a serious indictable offence where the penalties can be imprisonment for up to 10 years or a substantial fine or both.
We’re all paying for the cost of insurance fraud
The total cost of insurance fraud is challenging to estimate with precision.
In 2017 insurers detected $280 million in fraudulent claims in all insurance classes, excluding those relating to health insurance or personal injury (CTP, Government run Workers compensation etc). This figure represents the amount of detected insurance fraud only.
An estimate of the value of undetected insurance fraud in the Australian market is not yet available, but the cost of fraud, be it opportunistic or pre-meditated is a cost of claims and adds to the premium cost for all insurance consumers.
Through information sharing on suspected fraudulent or exaggerated claims, to operations and collaboration with Police around the country, insurers’ ability to detect insurance fraud, share when it happens and work with police to prosecute offenders will greatly increase the likelihood of insurance fraud being detected. This drives a direct benefit to consumers.
A number of initiatives are underway to enhance the industry's capacity to identify currently undetected insurance fraud activity. The Insurance Fraud Bureau of Australia (IFBA) established by Insurance Council of Australia members in December 2010, is coordinating an industry response.
We will shortly be launching a new portal for reporting fraud, in the meantime, to report suspected fraud, please email IFBA and supply the following details:
- your name
- your preferred email address
- your contact number
- the full name of the person(s) that you believe may be committing insurance fraud
- description of the suspected fraud
Additional details if known:
- the DOB of the person(s) you believe may be committing insurance fraud
- the full address of the location where you believe the fraud occurred
- date of incident, if known
Insurance Fraud Bureau of Australia
The Insurance Fraud Bureau of Australia (IFBA) is a working element of the Insurance Council of Australia established to help combat insurance fraud in all of its forms. IFBA is increasing the focus on combatting insurance fraud, working with police and other bodies to prosecute cases when identified.
What does IFBA do?
The specific mandate of IFBA is to execute information collection, sharing and analysis of insurance fraud information that facilitates insurance company action against insurance fraud, informs community decision making and law enforcement investigations activity; to reduce the incidence and impact of insurance fraud on honest policyholders.
In other words, IFBA exists to help stop insurance fraud so that the costs are not passed onto those in the community who do the right thing.
To do this IFBA:
- Provides a business hours service for community members to report suspected insurance fraud.
- Provides a law enforcement inquiry service to facilitate police investigations where insurance fraud may be a factor.
- Coordinates information exchange between insurers where insurance fraud or a criminal act is reasonably believed to have occurred.
- Participates in community and government forums focussed on crime prevention.