Many of you will have enjoyed a relaxing holiday and well deserved break this year,but travel insurer claims teams have never been busier. With travel insurance fraud onthe increase, Chris Hallett considers how travel insurers can identify fraudulent claims.
What is travel insurance fraud?
The average travel insurance policy covers a range of losses including:
- baggage (accidental loss, theft, delay), personal effects, money;
- cancellations, curtailment; and
- repatriation due to illness or injury.
Opportunistic fraudsters often claim for items allegedly lost or stolen while travelling both abroad and in the UK. That loss or theft may be entirely fabricated or the customer may exaggerate the value of genuinely lost items. Alternatively, customers might claim for cancellation of a trip due to illness - whereas they are actually choosing not to make the trip for personal reasons, financial reasons or they might submit identical claims on multiple policies. A more unusual, but still prevalent, problem is medical expenses fraud which might include overcharging or overtreatment in travel clinics… or even complete fabrication of the claim.
As a product, travel insurance tends to be cost-driven and insurers tend not to benefit from as much customer loyalty as seen in other sectors. Travel fraud is also perceived to be easier to get away with as many customers take out single trip travel policies as and when needed which can leave insurers further exposed to high volume, low value fraudulent claims.
On the rise
Recent years have seen a significant increase in travel insurance claims with quotes of ‘… 140% rise in lost baggage claims and 190% rise in cancellation claims in 2013’, and ‘… 7% of 18-34 year old UK holidaymakers admitted to having inflated a previous travel claim or having fabricated a claim in its entirety’. In the past year, 23% of posts on the Insurance Fraud Investigators Group (IFIG) website relate to travel fraud cases/investigations.
With the average claim for lost luggage valued at £2000, it is easy to see how important it is that something be done.
In June 2014, the Insurance Fraud Enforcement Department (IFED) made 11 arrests as part of a nationwide travel fraud operation. Claims values ranged from £300 to £14,000 and included claims such as lost or stolen clothing and electrical items, as well as medical expenses incurred abroad. Officers seized thousands of pounds worth of clothing, jewellery and electrical items, in addition to evidence of more organised fraud by way of partially completed a travel insurance claims forms, bogus doctor’s stamps and medical certificates.
How do you fight travel insurance fraud?
Travel insurance fraud can be difficult to prove with particular pressure being placed on the relatively low financial value of any one single loss compared to the cost of investigating the case further.
Travel insurers, claims handlers and investigators - unlike their motor and household counterparts - have historically had no travel claims database or other resource to track serial claimants, making it even harder to identify patterns, linked claims or serial claimants. At Hill Dickinson, we have addressed this by developing our own market-leading database, linked to our Netfoil product and proven intelligence analytics. ‘Netfoil Travel’ provides members with a low-cost platform on which they can safely and securely share common claims data, as well as undertake searches of the database where they have concerns that a claim may be suspicious. Matching claims data is returned to the respective member who can then continue their investigations at desktop level and retain control of costs.