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from the Ombudsman News monthly newsletter of October 2002: insurance fraud Fraudulent and dishonest claims are a major problem for the insurance industry and fraud is alleged in a number of the cases we see. These can be difficult to assess. To establish that fraud has taken place, some concrete evidence of lies, inconsistent statements or acts of deception must be present. The fact that members of a firm’s staff are personally satisfied of the claimant’s bad faith is not sufficient proof of dishonesty. The essential components of fraud are intent to deceive and desire to induce the firm to pay more than it otherwise would. Establishing these points can require an analysis of the claimant’s motives. Inevitably this is a largely subjective exercise. However, by the time a case reaches us, it is normally too late to uncover any new evidence. And by then, claimants are usually well aware of any problems in their version of events, and will have had ample opportunity to concoct an explanation – or to cloud the issue with extraneous pieces of information. It is far better if a firm has investigated the matter carefully at an earlier stage. Where a firm suspects fraud, it should make its views known to the customer, who can then respond to the allegations. We are unlikely to support a firm’s position if, instead, it uses a separate and spurious reason to justify rejecting a claim. When we look into cases involving an allegation of fraud, we examine all the facts and use the following guidelines to help us reach an overall assessment.
In some recent cases involving claims for written-off vehicles, firms appear to have asked customers to substantiate the original purchase price of their vehicle. As a result, some customers who had lost the original sales material (or perhaps purchased the car through somewhat informal routes) have sent in false documents. Other customers have produced false documents to try and substantiate a higher price than they actually paid. This is clearly improper, but it does not justify the firm voiding the policy. The customer’s claim is for the present market price, not the original purchase price. As long as there is no doubt about ownership and no suggestion of fraud, the firm should meet such claims on the basis of the normal market value. Where we can reach a view about whether the firm has obtained enough evidence to show that a claim is fraudulent, we will decide whether or not to uphold the firm’s rejection of the claim. Where the issue is uncertain and relies on the evidence of third parties, we may decide it is more appropriate for the courts to determine the outcome. |
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