What is your basis for that allegation of Insurance Fraud?
Insurance companies employ significant resources in fraud detection. However, the statistics on insurance fraud are not actively reported.
Therefore, there is limited data to draw on to form a concrete view of the prevalence in New Zealand. In 2019 the Insurance Council put the financial impact at $614 million. Fraudulent claims negatively affect every policyholder. Therefore, those who make fraudulent claims should be dealt with harshly.
Fraud in the insurance context involves a wide spectrum of activities. It can vary from misdescribing lost items amounts to arson and wilful damage of property.
In insurance, if the insurer believes you have made a false statement in support of a claim, they can label that statement as fraud, even if the claim is otherwise genuine. This is linked to the insured’s continuing duty of good faith. If the insurer can establish that false statement then they can avoid your policy from inception. Once tarnished by that fraud allegation an insured can have ongoing issues in finding future insurance.
Therefore, an allegation of fraud has considerable consequences for the insured. An allegation of fraud has a large physiological effect on claimants dissuading them from pursuing an otherwise meritorious claim. Many meritorious claimants do not have the ability, finances or time to fight back.
In my experience insurers can sometimes make an allegation of fraud without the proper evidential basis. Unlike with the insured, there are no consequences for the insurer in making an unsubstantiated allegation of fraud. In contrast, a lawyer may be in breach of the rules of professional conduct if they (personally or in concert with the insurer) make an allegation of fraud without good cause. Therefore, I believe that lawyers acting for insurers must test their client’s subjective beliefs and advance the allegation only if there are reasonable grounds to support it.
If you face an allegation of fraud by an insurance company ask them the question what is your basis for that allegation of fraud?