Insurance fraud in Malta : detecting, preventing and suppressing fraudulent policyholders

Abstract

Every year fraudulent claims make up a good proportion of the total claims received by Insurance companies. This occurs as a result of policyholders knowingly submitting dishonest claims. Their intention is to take advantage of the insurance cover with the aim of wrongfully and fraudulently obtaining benefits, cash and other payments. This constant threat has led insurers to introduce procedures and practices with the objective to minimize this serious crime. Malta is also experiencing the problem of fraudulent claims and it has been quite a challenging situation. Insurance companies have been forking out thousands of Euros each year due to fraud, and for this reason continuous improvements and developments in operations and practices have been taking place. The aim is to safeguard the Maltese insurance market against the continuous threat of fraud. The main scope of this dissertation therefore, is to provide the reader with a general understanding of the issue of fraud whilst examining what goes on in the Maltese insurance market. This study will also focus on the daily challenges stakeholders face and the way such fraudulent claims are detected and handled. The author has tried to: - Identify the most common types of fraudulent claims found in the market. - Combine together the views and opinions of the different stakeholders on the frequency and severity of insurance fraud. - Understand better the processes and procedures involved when examining and investigating fraudulent policyholders. - Study the work undertaken by stakeholders to combat and detect fraud. - Identify preventive measures and technologies which aid insurers and other stakeholders to combat this crime. Since fraud is a hazard which continuously evolves in creativity and develops throughout the years and an issue which has been researched very little in Malta, the use of both primary and secondary data were crucial for this study. The author thought appropriate to conduct a number of interviews for this thesis, such parties consisting of professionals working within or assisting the insurance industry to combat fraud. This helped the writer attain an in-depth understanding of the problem. The use of books, case laws and press cuttings were also crucial for this study; however the use of local statistics was not possible due to the lack of monitoring and assessment carried out in the Maltese market. The problem of fraud in Malta has always been a reality, but to the author's surprise only limited actions were being taken to detect and suppress it. However the industry has been experiencing a positive change in the last ten to fifteen years where cooperation, investment and technology have been recognized as being the answer to surmount the problem of fraud. There are still many challenges and obstacles ahead which need to be overcome, however the Maltese market is certainly heading in the right direction and adopting standards similar to those used in developed countries.