NSW is now experiencing the same issues the UK has had with car insurance fraud in the past decade, says UK Insurance Fraud Taskforce Chairman David Hertzell.

“There is a great similarity between what is happening here and in the UK,” he told insuranceNEWS.com.au.

“The UK Government became worried about 10 years ago when claims fraud accelerated.”

Mr Hertzell says one significant problem is consumers’ assumption that insurance companies are “fair game”.

“It is a long-term problem to counter that attitude, but we are seeing attitudes changing. People are realising they are paying for this fraud.”

IAG EGM Customer and Underwriting Tracy Green says NSW Government data indicates fraudulent and exaggerated claims are adding $75 for each NSW motor vehicle third-party insurance greenslip.

Commenting on Mr Hertzell’s belief that local insurers could save $2 billion in claims if they share claims data, she says issues such as privacy need to be addressed first.

“The NSW Government is looking at this,” she told insuranceNEWS.com.au. “I think there is a willingness to get through data protection issues for the better good.

Another important step in countering fraud is to send people for treatment, rather than just paying for an injury.

In the UK, whiplash claims rocketed over the past 10 years. Insurers were paying for the claims in cash, and it led to a number of companies being formed to help people make claims.

Insurers are now taking control of how these claims are managed, and Ms Green says “it is better for the insurer to provide treatment for the injury, rather than paying cash”.

Mr Hertzell agrees. “If you take the money out of the system there is less fraud. But insurers also need to be careful offering rehabilitation, especially when the injuries are minor.”

He says lawyers are becoming more involved in life insurance and motor injury claims in Australia and the UK – a trend that is pushing settlement costs higher.

Insurers are therefore tempted to settle claims more quickly to avoid legal bills escalating the costs, even if there are questions about what is being claimed.

“There is a view the insurer pays in the short-term to get rid of the claim before it escalates,” Mr Hertzell said.

Organised crime in the UK did also become involved in fraudulent claims and Ms Green says it is now also occurring in NSW.

“We believe there are elements of organised crime involved in fraudulent claims in NSW,” she told insuranceNEWS.com.au.

Mr Hertzell says his taskforce’s data-sharing is a way to combat criminal elements in claims fraud.