Close to nine in 10 (88%) New Zealanders did not fully understand the problem of insurance fraud, according to the annual survey by the Insurance Fraud Bureau (IFB).
The bureau said the figure was “concerningly large”, with many unable to comprehend the serious implications of insurance fraud and its potential impact on all policyholders.
Around 60% of respondents greatly underestimated the annual costs inflicted by insurance fraud. They believed fraud cost the industry up to $70 million, or roughly 10 times smaller than the industry estimate of $739 million.
Many respondents also underestimated the penalties for insurance fraud. Eight in 10 incorrectly believed that the worst penalty for being caught committing insurance fraud was having the claim declined.
However, this year’s survey also had some positive findings. Understanding of insurance fraud improved slightly at 12%, compared to 9% in 2020. More respondents were also aware of the consequences of fraud, with 57% agreeing that a criminal conviction is one of the possible penalties, a 5% increase from last year.
“While the figures are still concerning, it is pleasing to see small improvements being made by our focused education efforts,” said Yvonne Wynyard, IFB manager. “The sad reality of insurance fraud is that it is a cost that is covered by all policyholders. Improving this understanding will continue to be a key focus for IFB in our educational programme for the year ahead.”
