KPMG recently sponsored the Insurance Ireland Fraud Virtual Conference 2021, a fully digital half-day conference that featured engaging presentations and panel discussions from key industry experts and government officials on topical issues currently affecting the insurance industry. As part of this, I moderated a discussion by a panel of experts and delivered a presentation on attitudes to insurance fraud in Ireland, based on a piece of research commissioned by KPMG Ireland.
KPMG had this research conducted by Red C specifically for this conference on behalf of our strategic alliance partners at Insurance Ireland. To ensure we had a representative sample, quotas were set regarding age, gender, social class, and region to ensure that a nationally representative sample of over 1,000 respondents over the age of 18 was chosen.
The questions chosen were guided both by our regular conversations with our insurance clients and partners Insurance Ireland, but also from my own experience as a forensic accountant. Prior to joining KPMG, I worked at the Office of the Director of Corporate Enforcement as an investigative accountant for three years. Before that, I spent 17 years employed as a law enforcement forensic accountant in Ireland. In that time, I have had considerable investigation experience in the areas of fraud, bribery and corruption, money laundering, proceeds of crime, organised crime, and other civil and criminal financial investigations. In both roles, and in my role in KPMG, I have worked on some very high-profile financial crime investigations including many cases of fraud. More recently at KPMG, we have carried out work for the likes of the Central Bank of Ireland, the Pensions Authority and An Garda Síochána.
What is insurance fraud?
While most insurance claims made in Ireland are genuine, a minority of individuals making fraudulent and exaggerated claims costs Irish policyholders an estimated €200 million annually, according to Insurance Ireland. The perpetrators of fraud are wide-ranging, from criminal gangs who engage in fraud rings right down to individuals who exaggerate claims on their policy to get more money from their insurers, misrepresent claims or policy data, or obtain cover through the use of ‘ghost brokers’, who sell forged and invalid discounted insurance policies to unsuspecting consumers.
For the purpose of our survey, we defined insurance fraud as:
“Insurance fraud is any act committed to defraud an insurance process. It occurs when a claimant attempts to obtain some benefit or advantage to which they are not entitled”.
It’s clear from the survey findings that insurance fraud remains a key concern for both insurers and customers alike, with an overwhelming majority of people (86%) in Ireland believing that insurance fraud is wrong.
Somewhat less positive is that only 77% believe it is unethical to overstate an insurance claim, meaning that over one-fifth of people are either neutral on the question or may consider it acceptable. Also concerning is that our research showed that 8% may omit information when making a claim to get a higher pay out while 21% were neutral on this issue.
There is little doubt however that the public do believe that insurance fraud is a real problem. 1 in 3 believe that over 20% of claims are fraudulent. Almost half (46%) of respondents believe that any fraud should be reported to An Garda Síochána regardless of the amount, 22% believed that there should be a minimum level of €1,000 while 17% believed the threshold should be over €5,000.
Our survey also found that while attitudes towards insurance fraud are negative, most people remain reluctant to report somebody for fraudulent activity - particularly family, colleagues, and friends. Only 1 in 5 would be happy to assist the defence of a fraudulent claim in court. The main reasons that were cited include fear of being identified, retribution from the fraudster and perceived hassle. In fact, 98% of respondents stated that they have never previously reported a case of insurance fraud. 86% of our survey respondents also believe people who commit insurance fraud are motivated to do so because they believe they can get away with it.
Reluctance to report and an acceptance that people can get away with fraud demonstrate the clear need to better highlight cases where fraud has been detected. It also clearly demonstrates that we need to educate the public on how to safely report suspected fraud, as the culture of fear is a major barrier to putting a stop to this issue.
In terms of who should bear the brunt of tackling fraud, 3 in 4 believe the insurance sector itself should be responsible, compared with approximately half believing it should the responsibility of the legal sector, policy holders or the government and only 2 in 5 holding An Garda Síochána responsible. The fact that people are not decided on one clear path to reporting insurance fraud further highlights the need for greater public awareness of how and where we can report fraud.
While it is positive that a great majority of people believe that insurance fraud is wrong, there are still some clear gaps in the public’s understanding of what the best way to report insurance fraud is. Greater public education through communication and engagement on how fraud can confidentially and safely be reported should help to reduce fraud and ultimately reduce the cost of premiums for policyholders.