The director of a new private insurance fraud hotline says the service is intended to fill an industry void and is not designed to make money.

AHC Investigations Director Anthony Callaghan has established the Insurance Fraud Hotline, a privately run service allowing Australians to report cases of suspected insurance fraud.

The service will allow people to report fraud through both the telephone and a dedicated website, which is expected to be the preferred method used to flag suspicious activity.

Offered free to both insurers and the public, the service will be ready for launch next month, with an official launch in mid-August. The business is based in Hornsby NSW.

Mr Callaghan told insuranceNEWS.com.au data collated by the service will be forwarded to individual insurers, who could follow up leads and eliminate false allegations.

Despite “significant” set-up costs including legal advice, IT systems and a dedicated employee, Mr Callaghan insists the business is not intended as a money-making venture.

“There is a lot of information not being acted on in Australia and this is an opportunity to make a difference,” he told insuranceNEWS.com.au. “I just see this as a way to fill a void in the industry and encourage people to do the right thing.”

Despite existing fraud reporting facilities provided by the Insurance Council of Australia (ICA) and individual insurance companies, Mr Callaghan says many people don’t know how to report insurance fraud.

“You might hear someone at a barbeque bragging about torching their car, but most of the time you’re not going to know who the insurer is so you won’t be able to directly approach the company,” he said.

ICA has welcomed the development.

“ICA supports initiatives which promote the reporting of fraud because ultimately it results in savings to consumers,” a spokesman told insuranceNEWS.com.au.

“Fraud is a serious problem which inflates the cost of premiums. Therefore, ICA recognises the role this kind of venture can play in reducing overall costs to policyholders.”