Motor insurance fraud in Malta : an evaluation

Abstract

The purpose of this study is to explore the magnitude of the problem of motor fraud in Malta. Insurance fraud is a serious and growing problem not just in Malta but also globally, which is causing the insurance industry big losses. Fraud not only impacts the financial position of an insurer and its business, but also the policyholders given that fraud losses lead to higher premiums. When fraud takes place, everybody has to pay the price. Fraudulent claims can be difficult to recognize or asses and that is the reason why new anti-fraud efforts need to be continuously tested. More specifically, this study focuses on how to recognize and combat fraudulent claims in the class of Motor Insurance in Malta. The class of motor insurance can be defined as one of the most insurance fraud targets. This is because the number of dishonest motor claims that are submitted is high when compared to other classes of insurance. Moreover, the financial crisis has forced many people to take desperate measures in order to meet their payments and the cost of living. Motor insurance fraud can be committed in many ways; ranging from an inconsistent statement to an organized road accident. For this research I will be conducting in-depth interviews with a number of local insurance companies as well with the Malta Insurance Association (MIA) to gather information about the nature of motor fraud claims and the current measures used to identify and prevent fraud. Understanding how customers perceive motor fraud will lead to a better understanding of how to identify, investigate and eliminate the risk. For this purpose I am using surveys to determine customers' attitudes towards insurance fraud and its detection.