Most of us look forward to our annual vacations, time away from the office, winding down, and relaxing in the sun. Many will travel with the minimum of insurance coverage, often as part of package holidays or tours or with policies offered through our financial institutions or credit card companies. The majority will never make a claim.
For others, however, claiming against their travel insurance is a professional occupation. A recent survey by the Association of British Insurers found that 47 percent of travelers were prepared to make fraudulent travel insurance claims. Many were opportunists willing to take the risk.
In 2001, a Sydney Sun-Herald article quoted Tony Dear, the Australian travel insurance industry pioneer, as saying that one in four travel insurance claims was fraudulent. Despite this, six in 10 claims were paid within a week or 10 days, he said.
Having insurance does not absolve policyholders from the duty of care for their possessions. Claims for unattended baggage in airport lounges, hotels, restaurants, train stations. and bus stops often are rejected because the claimants failed to take "reasonable care" to protect their property.
Associated with many travel claims are the health benefits accompanying the policy. Research has shown that many policyholders submit claims for emergency surgery and dental repairs resulting from accidents or bills for recovery from more serious illnesses that occur while they are vacationing.
Some notable serial claimants include the man who claimed for the cost of having his appendix removed while in Cyprus. Further investigation revealed, however, that he had made the same claim on eight previous occasions. Or the woman who claimed on five separate occasions for the loss of the same eye. The cause of the alleged injury ranged from being attacked to jumping into a swimming pool.
Opportunists are never far from the spotlight. A traveler in West Africa filed a claim for recuperation costs after recovering from a heart attack while on vacation. The bill actually was for the cost of visiting a local brothel.
Investigation Roadblocks
In December, I traveled to Europe and Asia, where I met with a number of investigators. I was amazed by some the scams being perpetrated by the traveling public. The claims were widespread, ranging from bogus and legitimate medical treatments to lost luggage and inflated prices for allegedly stolen items. Investigating these claims, however, can pose even bigger risks for investigators.
Many countries are experiencing political unrest. Some insurers with whom I have spoken have received claims for medical treatment originating out of the war-torn areas of Iraq, making it very difficult to finalize claims.
While in Singapore, just two days before the tsunami, I met with an investigator colleague who said that Asia continues to be a problem for insurers. Dogged by corruption, the region is one of the most difficult in the world in which to work. Fraudulent medical practitioners providing bogus certificates and tour guides who receive kickbacks from travelers to help them lodge fraudulent claims are just examples of the issues that insurers and investigators continually face.
Insurers still fail to understand the culture in the East, according to my colleague. Vietnam, alone, has more than 200 sects, and major cultural and religious differences exist across India, Sri Lanka, and the sub-continent.
Nevertheless, insurers in the region remain vigilant for potential fraud artists. An article in The Straits Times, on Dec. 22, related how three Singaporean travelers had attempted to defraud Mitsui Sumitomo Insurance of more than $20,000, claiming that they lost their luggage during flights to and from Australia. A diligent claim executive discovered inconsistencies with receipts and documents, resulting in fines and jail sentences for the three.
Investigating claims in foreign countries is never easy and the year ahead promises to be one of the most challenging of all. The latest crisis to test insurers is the tsunami that ravaged those countries ringing the Indian Ocean. "The recent Tsunami disaster in Asia is indescribable," said Larry Henning, senior vice president for the special investigation unit at MJM Investigations in Raleigh N.C. "However, as insurance investigators we must remain focused because there will be people out there who will use this disaster to take advantage of the situation and we need to identify them quickly to assist insurers in taking appropriate action."
The tsunami was truly devastating, and our hearts go out to those who have suffered enormous personal tragedies as a result of this disaster. Unfortunately, there will always be the opportunist looking to take advantage of someone else's misfortune. Insurers are faced with a most difficult task. They must be empathetic and, at the same time, remain objective when assessing claims.
Phil Peart is the former editor-in-chief of Fraud International, which has been integrated into Claims.
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