Insurance fraud in New Zealand is creating wider effects than often assumed, according to recent data shared by the Insurance Fraud Bureau New Zealand (IFB), part of the Insurance Council of New Zealand (ICNZ).
While often viewed as an issue that affects only insurers, fraudulent claims have a broader impact across communities, businesses, and public services.
A November 2024 survey by the IFB suggests that public concern about insurance fraud is growing.
Sixty-one per cent of respondents said they believe claims that exaggerate losses, such as for stolen items, are common. Another 55% recognised that providing incorrect or incomplete information during the claims process happens frequently.
Forty-four per cent of participants said entirely made-up events – like staged accidents or theft – are common. Concern about deliberately staged claims, such as arson or theft, rose to 39%, up from 30% in 2020.
These findings indicate an increasing awareness of the range of fraudulent behaviours that affect the insurance system.
In parallel with fraud, cyber threats are becoming more common in New Zealand. Phishing, malvertising, and fake e-commerce offers were among the most frequently reported cyber threats in the final quarter of 2024, according to cybersecurity firm Gen.
The same report found a 21% increase in extortion-based emails and a 157% increase in coinminer malware. “Scam-yourself” schemes – where people are tricked into disclosing their own personal data – also doubled in frequency.
Facebook was the leading platform for social media scams, accounting for 56% of incidents. Telegram was also identified as a tool for scams due to its privacy features.
Ransomware attacks increased by 50%, while new malware such as DroidBot and ToxicPanda targeted banking and cryptocurrency credentials.
Although insurers are typically the direct targets of fraud, the cost is often passed on to policyholders through higher premiums, the IFB highlighted. The result is that most New Zealanders end up paying more for their insurance due to a relatively small number of dishonest claims.
The cumulative effect of fraud leads to higher overall costs in the system, placing pressure on both individual policyholders and insurance providers.
The IFB noted that some fraudulent activities – especially those involving faked injuries, staged crashes, or deliberate damage – create additional demands on public resources.
When emergency services respond to these incidents, their time and effort are taken away from legitimate emergencies, increasing strain on firefighters, police, and medical responders.
Beyond personal insurance, fraudulent claims can raise costs for businesses. These additional expenses may result in price increases for consumers or affect staffing levels.
Small businesses are particularly vulnerable, as they may not have the capacity to absorb unexpected insurance costs linked to fraud.
Over time, consistent fraud across sectors can slow growth and limit insurance options available in the market.
Fraud can also impact how the public views the insurance process. When people believe fraudulent claims go unchecked, they may be less likely to report suspicious behaviour – or consider making a false claim themselves.
The IFB offers a secure and confidential way to report suspected insurance fraud. It encourages policyholders and industry professionals alike to report questionable claims to help maintain a fair and functioning insurance system.
