THE INSURANCE sector has reported an upward trend in fraudulent activities by policyholders. Slovakia’s largest insurer, Allianz-Slovenská Poisťovňa reported an almost one-third increase in the number of claims examined based on suspicions of fraudulent behaviour in 2010 compared to 2009. Other insurance companies reported similar experiences and insurers said that last year’s floods are particularly behind the trend as many people attempted to purchase an insurance policy only after their property had been damaged.
“Last year 911 non-life insurance claims were examined due to suspicion that an insurance fraud was committed, an annual increase of 27 percent,” Jaroslava Zemanová, the head of Allianz-Slovenská Poisťovňa's department of control and special activities, wrote in a press release.
In 2009 the insurer had examined 716 suspicious insurance claims, up 15 percent from the previous year.
“We can see that the number of insurance frauds has been continuously increasing,” she wrote.
In 2010 Allianz-Slovenská Poisťovňa reviewed 494 suspicious claims seeking a damage payment under a compulsory auto liability insurance policy, 281 cases involving property insurance and 136 cases involving comprehensive auto insurance. The aggregate damages in these reviewed claims amounted to €5.9 million.
Last year Generali Slovensko uncovered what it called 8,940 fraudulent attempts to claim damages exceeding €4 million, the insurer wrote in its press release. Compared to 2009 this was an increase of 35.3 percent. Generali Slovensko wrote that it continued to see the highest likelihood of fraudulent behaviour in its auto insurance business and in Bratislava Region, reporting that policyholders tried most often to fraudulently receive excess reimbursement based on fictitious damages which did not occur as claimed by the policyholders. The next most common fraud was an attempt to increase the amount of damages to be recovered. The third most common fraudulent acts involved concealing facts or giving false information when policyholders failed to report, for example, consumption of alcohol or another violation of law.
Generali Slovensko provided the example of a policyholder who purchased a €33,000 insurance policy for a wooden shed in a Roma settlement and then declared flood damage to a cellar even though there was no cellar.
Generali Slovensko wrote that it is continuing to improve its mechanisms to uncover frauds and it reported its success in uncovering fraudulent acts as exceeding 70 percent of the examined suspicious cases.
Floods brought more fraud
“If we look at the trends we see in this segment, we can say that the floods and extensive rains in 2010 indirectly affected insurance fraud,” Zemanová stated.
Lucia Muthová, spokesperson of Allianz-Slovenská Poisťovňa, gave as an example a claim presented by a policyholder for damage to a family house. Total damages to the household caused by the rain were claimed as €3,000. But further examination by the insurer revealed that the roof was under extensive reconstruction during the rain and that as much as four fifths of the roof was covered only with a plastic sheet.
“The damage of the household was caused by the insufficient [roof] covering and thus the claim was turned down,” said Muthová.
On the other hand, people living in regions endangered by floods have reported problems in obtaining flood insurance policies.
“Insurance companies have mapped out the situation very well and when insuring houses in the village they are very careful,” said Jozef Adamkovič, the mayor of Sady nad Torysou village, which was hit by floods several times last year, as cited by the Pravda daily in mid February. “They [insurers] either do not want to sign an insurance policy with the people or they ask for such high premiums that insurance does not pay off.”
People are not covered for damages to automobiles in all circumstances and Muthová explained that auto insurance does not cover vehicles that are wilfully set on fire.
“Deliberate ignition of a vehicle is excluded from car accident insurance,” said Muthová, adding that an insurer pays damages only for cars that are secondarily damaged by the torched car.
