New Zealand insurers have had enough. With fraud costing them up to $NZ300 million ($261 million) a year, they have begun a zero-tolerance campaign to catch the perpetrators.

Insurance Council of New Zealand CEO Chris Ryan says its members have agreed to refer every suspect case of fraud to police. Customers found to be attempting insurance fraud will not only face prosecution, they will find it very difficult to ever obtain insurance again.

Mr Ryan says individual insurers are often reluctant to prosecute suspected fraud cases. High-profile cases can harm their reputation, as they are often seen as the Goliath in a case of good versus bad. Losing face in such a tight market can have a bad effect on an insurer’s market share, so most have just rejected fraudulent claims and moved on.

“That’s why we’re doing it as an industry initiative,” Mr Ryan said.

With everyone adopting the same strategy, the main downside to prosecuting offenders is effectively removed.

Mr Ryan says the zero-tolerance regime coincides with an education campaign telling people about the real costs of insurance fraud. “Fraud is not a victimless crime. It has an effect on all insured people.”

Insurance fraud may seem easy to get away with, but policyholders are now much more likely to be caught. The penalty is long-term – with convicted fraudsters often refused any further insurance.