What can be the consequences of insurance fraud?
Insurers take insurance fraud very seriously. If an insurer suspects fraud, it may investigate the claim or insurance application. If it is discovered that you are committing insurance fraud, there can be serious consequences. We explain the consequences of insurance fraud here.
#1 Termination of insurance
Insurance with which fraud has been committed is almost always terminated by the insurer. For example: you reported a broken cell phone as stolen during your vacation. If the insurer discovers this, there is a good chance he will terminate your continuous travel insurance immediately. Do you have other ongoing insurances with the same insurer? Then he will assess whether they will terminate these as well. By committing insurance fraud, you damage the trust of the insurer. They can no longer be sure that you are abiding by the agreed-upon insurance rules, and therefore almost always choose to terminate all current insurance policies. Insurance fraud therefore affects all your insurance policies, not just the one you commit fraud with.
#2 Coverage is denied
When insurance fraud is identified, an insurer will always deny payment of the claim. It may even be the case that an entire claim is denied when in fact only a small portion has been fraudulent. Imagine your home is broken into. A number of things are stolen, including a television and some jewelry. When filling out the claim, you decide to list an additional cell phone as stolen. Nice touch, right? Not really, because if the insurer finds out, it may refuse to pay out the entire claim. The insurer will not reimburse the claim and you are then stuck with a lot of expenses.
#3 Registration in insurer fraud register
If your insurance is terminated because of insurance fraud, the insurer stores your information in their registry. Many people confuse this with a so-called "blacklist. Insurers do not keep a blacklist of individuals, but they do record it when and why an insurance policy was terminated. It's meant to alert their own organization and ensure that you can't get insurance there again. Internal registrations are not visible to other insurers.
#4 CIS registration
An internal registration is not visible to other insurers, but a CIS registration is. Foundation CIS stands for Foundation Central Information System. In their database they keep all insurance data that is important to share with insurers. Not only insurance fraud is registered, but also defaulters, a disqualification from driving or a criminal history. Insurers and agents can put this data into the national database. The database aims to make any risks for insurers manageable and prevent fraud as much as possible.
Having a CIS registration makes it difficult to obtain new insurance. Before an insurer accepts an insurance application, it always checks the CIS database. Are you registered for insurance fraud? Then chances are they will refuse your application. You then pose too great a risk to the insurer. With a CIS registration you can actually only go to insurance company De Vereende. De Vereende specializes in insuring special cases and risks. Because of their wide acceptance policy you can still get insurance, even with a registration for insurance fraud.
# 5 Reporting to the CBV
CBV stands for Center for Combating Insurance Crime. The CBV is a department within the Dutch Association of Insurers specifically for supporting insurers in tackling fraud and other forms of insurance crime. Are you applying in the insurance industry or a financial institution? Then chances are the company will consult the CBV and see your registration. This, of course, does not fit with the good first impression you want to make. They may also reject your application for this reason. So insurance fraud can also affect your career.
#6 A fine, investigation costs and a higher premium
Committing insurance fraud also has financial consequences, of course. For example, SODA has been claiming a standard fine of €532 since 2016. In addition, an insurer must be able to prove fraud. This is why they always investigate when they suspect insurance fraud. These investigation costs can sometimes be substantial, especially if an external investigation agency or an expert has to be hired. If it is determined that fraud was indeed committed, the investigation costs will be recovered from the fraudster. If no fraud had been committed, no investigation would have had to be started and these costs would not have been incurred. Therefore, investigation costs are always the responsibility of the fraudster.
In addition, your new insurance will also be more expensive. As mentioned, with a registration for insurance fraud you can only take out insurance with De Vereende. This does involve some extra costs. At De Vereende you pay a considerably higher premium for your insurance. Also, when taking out the insurance you have to pay three months of premium in advance. Finally, you pay a deposit. De Vereende can use this deposit to settle outstanding premiums if you are late in paying.
#7 Reporting to the police
Finally, the insurer may choose to report it to the police. However, this is not often done in practice. Insurers do this particularly if the amount of fraud is very high or if organized crime is involved.
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