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Research Shows High Proportion of Customers Prepared to Commit Insurance Fraud

Southern Cross released the details of research it has done into the attitudes of customers towards insurance, and specifically how they regarded certain kinds of insurance fraud. The results are frankly shocking. These are key statistics from the release.

Southern Cross Travel Insurance (SCTI) found that:

- 21% of men felt that with any type of insurance, it was acceptable either ‘all’ or ‘some of the time’ to inflate the amount claimed to cover a policy excess

- 11% of men felt it was ok to claim for pre-existing damage to an item that occurred prior to travelling.

By comparison, 17% of women felt it was ok to inflate a claim, while 9% thought it was ok to claim for pre-existing damage.

SCTI dealt with the matter sensitively: heading the press release "Trust Issues" and also providing, for balance, the explanations offered by people in the survey. The survey found that many customers thought that insurers either 'always' or 'most of the time' look for ways not to pay a claim. They also proceeded to discuss the elements of good faith. You can read the release at this link.

Is this is reliable guide?

Admissions is probably under-reported, because a number of people will know that it is wrong to claim a higher amount than is justified, but will not admit it to a researcher. Indeed, given the relatively high level of admissions revealed in this survey, and typical rates of non-reporting for 'bad' behaviour and the actual levels could be a lot higher. It would be good to know more about the survey methodology to examine the way these admissions were obtained. There may be a difference between how a person views the behaviour of another and their own intentions.

What does this mean for other kinds of insurance?

It means that additional costs are added to the premiums for all insurers - and these costs take a number of forms. Even if inflated claims are routinely discovered and reduced to their proper amount it means the cost of that process must be paid by all policy holders, and the additional evidential requirements impose costs of time and effort on all claimants. Some of those claimants may give up in the face of a complex process, and ironically, blame the insurer for trying to find ways to make it hard to claim.

Of course this should be set against real cases where insurers deny valid claims, or make a claim too hard to make. It is a challenge to reinforce the levels of trust needed to ensure the efficient operation of an insurance sector. We can also ponder mainstream media's lack of interest in the survey: they are quick to pick up on stories of insurers not paying. I suspect that if this survey were on a different subject, then we could expect much greater coverage. What if the headline were "21% of men think it is acceptable to defraud Inland Revenue" or "17% of Women think it's acceptable to defraud local schools."




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