Fraudulent insurance claims are on the rise

Fraudulent insurance claims have cost the General Insurance industry an estimated $140 million in 2012. These, by means of fraud or inflated claims.

The General Insurance Association of Singapore (GIA) has made a conservative estimation that 20 percent of all motor claims are inflated, or made from fraudulent third-party property damages or personal injuries.

This has resulted in higher insurance costs, which will affect not just motorists, but across the board.

Speaking to The Straits Times, GIA Executive Director, Derek Teo, said that everyone will in turn be a victim of motor insurance fraud. He explained that these fraudulent claims will lead to higher underwriting loss for insurance companies, which will translate into higher premiums. 

For instance, firms such as taxi companies and private school bus operators will have to pay increased premiums, which means public transport costs will also go up, hence affecting commuters.

Statistics has also shown that the average annual insurance premium has risen from $1,013 in 2008 to $1,280 in the previous year.

GIA added that it is not uncommon for workshops or touts that encourages people to make bodily injury claims, which is deemed by many as 'easy' money. To date, the highest claim made for whiplash - an accident-related personal injury - is $2 million. 

To tackle the worsening problem of insurance fraud, GIA is adopting a systematic and structured approach. It has formed an Insurance Fraud Committee to look into the problem, and will seek help from the respective authorities, such as the Traffic Police, Subordinate Courts and Monetary Authority of Singapore, to clamp down on fraud cases.

GIA has advised consumers to not deal with unauthorised tow truck operators or send their vehicles to unauthorised workshops to avoid complications of their claims. Mr Teo has also added that drivers should due diligence before signing any forms at car repair workshops.