Industry stakeholders in New Zealand have warned of a likely increase in fraudulent insurance claims as the coronavirus recession drags on.

In past economic slump, insurers have often been targetted by financially strapped fraudsters, and this time will be no different, according to the Insurance Fraud Bureau New Zealand.

The bureau made the assessment last week as economic data showed New Zealand is officially in recession, following a record 12.2% gross domestic contraction in the June quarter.

“We know that financial hardship can lead to an increase in insurance fraud,” the bureau says. “Trends from recent recessions have shown that fraud often starts increasing later in a financial crisis.”

An insurance fraud investigator in Australia told insuranceNEWS.com.au that in any economic slump, people who may have lost their jobs or have their working hours reduced “may be financially motivated to make false claims”.

In New Zealand about 10% of claims lodged in 2018 are believed to be fraudulent, costing the industry some $NZ614 million ($570 million), according to the fraud bureau.

Claiming for “extra” items is one of the most common methods some policyholders use to try to scam insurers. The claims are genuine but they see an opportunity to try to inflate the claim.

Another tactic involves making up claims by staging car thefts or house burglaries.

The industry is also targeted by so-called “ghost brokers”, who present themselves as genuine representatives of insurers and offer fake products to unsuspecting consumers.

The New Zealand Insurance Law Association is also expecting a sharp spike in fake claims, saying people wrongly assume their actions are nothing more than a “victimless crime”.

“It’s highly likely New Zealand will see increases in fraudulent claims as the economy struggles to recover from the ongoing ramifications of the pandemic,” President Myles Noble said.

“People may think life’s tough living through a global pandemic, but dishonestly claiming against an insurance policy will make it a lot harder.”

He says those who think they’re “just getting back what they’ve paid for all these years” in premiums to insurers are wrong.

“Everyone with a policy has to pay for insurance fraud. A portion of every premium is to cover claims made through deception or dishonesty.”