Insurance fraud

Extent of insurance fraud

There are no statistics on the extent of insurance fraud. However, insurance companies proceed on the assumption that ca. 10 per cent of their benefit payments are based on bogus claims, this running into several hundred million Swiss francs every year. In addition, an opinion poll showed that every 4th individual surveyed knows someone who has engaged in insurance fraud at one time or another. Most bogus claims are filed in connection with the following insurance types: motor, contents, valuables and travel insurance. The number of cases of attempted fraud which have been detected has increased during the last few years. One reason for this success rate is the fact that insurance companies scrutinize claims a lot more closely than they did a few years ago. They do this in the interest of all their honest policyholders, seeing as they are the ones who have helped to finance this fraud through their premium payments.

No laughing matter

Insurance fraud is still not taken seriously by many people, the assumption being that an anonymous organization is being harmed which can well afford it on account of its deep pockets and not an individual. Yet if you file a claim, you expect to be treated generously and receive the benefits you have paid for without much ado. However, claims are filed which far exceed the actual loss. Frequently the description behind how the loss was incurred is also distorted and exaggerated, so that the event fits the specification of what is covered by the insurance.

To be sure, insurance fraud has never been a laughing matter for insurance companies. The Insurance Contract Act (VVG) specifically states that an insurance company can rescind a contract if a bogus claim is filed.

Consequences of attempted fraud

In practice this means that the insurance company can rescind the contract in the event that fraud is detected and even demand a partial repayment of benefits already provided or paid out. This method of dealing with the matter has always been applied in the interest of honest policyholders.

In addition, the individual committing insurance fraud has to reckon with criminal prosecution. According to the Swiss Penal Code, fraud is punishable by incarceration of up to several years. In addition, an entry is made at the Central Criminal Records Division if convicted.

Action taken by insurance companies

It should be borne in mind that insurance companies do not suspect fraud to be lurking behind every claim. But when there are certain telltale signs of an unjustified claim being filed, it is examined more closely. Nowadays many insurance companies have specialists who investigate these cases. These experts are highly knowledgeable and experienced, thus enabling them to precision-clarify the situation. For example, they own equipment enabling them to detect forged documents.

Measures taken by the SIA

The Association promotes the exchange of information and experiences among insurance companies. It maintains relations with the police and customs authorities, in addition to specialist fraud agencies outside of Switzerland. By regularly publishing articles in the print and electronic media, the Association not only endeavors to show policyholders that no claim is honored sight unseen but that an attempt is made by insurance companies to manage the premiums paid by the policyholders conservatively.