It is estimated that up to three-quarters of a million Brits have committed travel insurance fraud, with many of them not even realising they are committing a crime. Traditionally, travel claims have also been seen as a “soft target” by deliberate insurance fraudsters. However, that situation is changing, and so are the penalties. Here we take a look at what constitutes travel insurance fraud, and why you should think twice about committing it…
Why Travel Insurance Matters
Everyone travelling abroad from the UK is advised to take out a travel insurance policy before they travel. It covers the cost of emergency medical treatment you may need while travelling, the cost of your flight in the event of having to be flown back to the UK in an emergency, and the cost of your belongings if they are lost or stolen. However, many people are abusing this system, and travel insurance fraud has been on the increase since 2012.
What is Travel Insurance Fraud?
Comparison site GoCompare, who in 2013 undertook a survey into travel insurance fraud, advises that “faking a claim or bumping up the amount of a genuine claim to make it more worthwhile is fraud.”
The vast majority of fraudulent travel insurance claims are relatively small-scale, with people attempting to recoup some of the cost of their holiday by claiming for items such as mobile phones that they have never actually owned and suitcases that have actually arrived but they clam have been lost by the airline, or exaggerating claims, such as claiming that a watch they have lost was a designer brand. Many of these people do not even realise they are committing fraud, and that it is a serious crime with potentially heavy consequences.
However, in recent years travel insurance claims have become more elaborate and devious. A BBC investigation in 2015 revealed how increasing numbers of people are claiming for medical treatment they have not had, and even faking kidnap plots in order to take advantage of high ceilings on compensation amounts.
Many people are also unaware that they are committing insurance fraud if they claim for the same item twice. For example, if a personal belonging is lost or stolen while you are on holiday, you are entitled to claim for it on your travel insurance. However, if it is also covered by your home insurance policy, and you subsequently try to claim for the same item on that, too, you are committing fraud.
Who Commits Travel Insurance Fraud?
According to the GoCompare survey, travel insurance fraud is most likely to be committed by those in the 18 to 34 age bracket, with 7% of those questioned admitting to having lied about or exaggerated a claim. A similar survey by Direct Line Travel Insurance backed up the age group findings, but found the numbers of those having committed fraud were a great deal higher, with 33% of 18 to 29-year-olds having made a fraudulent claim. Both surveys found that the over-50’s were the least likely to make a false claim. Overall, 11% of British travellers are thought to have increased the value of an insurance claim, with 5% claiming for additional items. Many of those who have done so allegedly did not realise they were committing a crime, stating that they believed it was acceptable because it is so commonplace.
One of the highest rates of travel insurance fraud is among backpackers attempting to cover the costs of their gap year travels. The insurance industry became suspicious when it was revealed that one in five insurance claims made by backpackers were made within the last 20 days before their cover expired.
What is the Insurance Industry Doing About It?
The Association of British Insurers estimates that fraud adds an extra £50, on average, to every UK policyholder’s yearly insurance bill, as the cost of fraud is passed on by insurance companies to the consumer. While this covers the cost of all types of insurance fraud, it dispels the myth that travel insurance fraud is a “victimless crime”. Traditionally, travel insurance fraud has been seen as the easiest type to get away with, as insurance companies have always concentrated the most carefully on motor insurance claims when it came to fraud detection. However, the rising cost of travel insurance fraud has brought it under closer scrutiny. Through sharing information, insurers have learned to identify trends and hotspots. They are also working closely with the Insurance Fraud Enforcement Department, the police unit specifically for tackling insurance fraud. Known insurance fraudsters are added to a database which is shared throughout the insurance industry. It is estimated that two-thirds of false travel insurance claims are now successfully identified.
Medical experts are also highly adept at identifying false travel insurance claims for medical treatments, such as identifying whether scars are consistent with procedures the claimant alleges to have had. However, many people are now caught out by simple factors such as time and date functions on mobile phones, where they have photographed items at a later date than they have reported them stolen.
What are the Penalties for Travel Insurance Fraud?
If you are found to have committed travel insurance fraud, you will get a criminal record. A fraud conviction can make it extremely difficult to obtain other types of financial cover, such as car or home insurance, or a mortgage. It is also unlikely that you will be able to travel to some countries if you have a criminal record.
In the most serious cases, however, travel insurance fraud can carry a jail sentence. In June 2014, police in London carried out a series of dawn raids on the homes of suspected travel insurance fraudsters, resulting in eleven arrests. They said it should act as a warning to anyone else considering committing travel insurance fraud. Several of those arrested ended up with custodial sentences, including a man who was jailed for two years after making fraudulent claims totalling £88,000 to different travel insurance companies. However, a travel insurance crime does not always have to be on this large a scale to receive a custodial sentence. Two British backpackers received 16-month jail sentences for falsely claiming to have been robbed while travelling.
Advice for Genuine Claimants
If your travel insurance claim is genuine, you should have no problem receiving your compensation, as long as you have the relevant cover and you adhere to all your insurance company’s stipulations. Travellers are advised to read their policy documents thoroughly, and take copies away with them. In the event of needing to make a claim, this means you can ensure you have fulfilled all your obligations at the time, rather than getting home and realising you have omitted something essential to your claim. If your claim is not genuine however, please think twice before making it. The implications for your future are potentially severe, and there is a very high possibility you will get caught.