It is a fact of life that there will be an uptick in claims during the festive months – but brokers should be on the lookout for a rise in fraudulent claims too, warns one claims handler.
“The run up to Christmas is one of our busiest times of the year, and we’re already witnessing the same pattern emerging this year,” says Sally Griffiths, Director at VFM Services in the U.K., a company that plans to expand into Canada in January. “We know that there are people who think they can claim on their household insurance to try and get a new TV in time for Christmas, or perhaps some new jewelry for a present. It's a seasonal pattern you can set your watch by in our experience.”
The most recent example is a Mississauga couple who now face criminal charges after police say they falsely claimed Christmas gifts had been stolen after falling from their car.
According to Peel police, the man and woman reported their car was damaged by a piece of falling ice in Brampton, Ont., and that a bag containing gifts for the children fell from the car during the incident and was subsequently stolen.
The man latterly admitted to fabricating the story while making his statement to investigators, and that the damage to the car was from another incident.
“Fraud is a serious and growing crime in Canada,” Griffiths told Insurance Business. “The industry has made significant headway in countering fraud in the U.K., developing a number of effective strategies to identify and put a stop to both organized and opportunistic fraud. VFM Services is excited to be launching its services in Canada and we look forward to engaging more closely with the industry to share best practice techniques and help Canadian insurers combat this crime.” (continued.)
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Historical data from VFM show claims for iPhones, jewelry, laptops and TVs were at their highest during the last quarter of 2012.
More telling, the claims that were not settled or repudiated when challenged by VFM’s conversation management process, rose during the same period, compared to the three previous months in 2012.
“Our experience shows us that claimants think insurers won’t notice the odd TV or lost laptop going through the system when the industry is seeing high volumes of claims around this time of year,” says Griffiths. “Insurers should ensure their fraud controls aren’t affected when managing high-volume claims brought about by Christmas or adverse winter weather conditions for example.”
The Ontario couple have been charged with public mischief, and are scheduled to appear in court in the new year.
Of all the claims received by VFM during the fourth quarter period, 42 per cent of iPhone claims, 21 per cent of jewelry claims and 41 per cent of TVs were not settled, saving the insurance industry almost $2.9 million in three months alone.
“Outsourcing, even on a temporary basis, should be considered as an alternative, as the potential savings could far outweigh the initial outlay cost associated with this,” says Griffiths. “Opportunist fraudsters need to know that insurers never take their eyes off the ball, and so claimants shouldn’t even chance a dishonest claim.”
VFM experts believe that the figure will be the same, if not higher this year, and warn insurers not to ignore the issue of fraud, particularly claims for alleged accidental damage to electrical goods, as these contain the highest risk of fraud of all household claims.
