Understanding the counter measures adopted to combat fraudulent claims and the effected of such fraud in relation to travel insurance

Abstract

Travel insurance is an affordable insurance product designed to cover risks and unexpected events associated with travelling. These days travel insurance is becoming significantly sought after by holidaymakers. However, popularity can also bring about negative situations such as insurance fraud. The majority of insurance claimants are considered to be genuine, although this may not always be the case. For this reason, insurance companies set up measures to be in a position to identify and detect any irregularities that might come up. The purpose of this study is to have an understanding of the measures implemented by local insurance companies in relation to travel insurance. Additionally, this study also focuses on the effects that might come up with the submission of a bogus claim. Detecting fraud can more often than not be an intricate undertaking. Thus, insurance companies are constantly on the lookout for such occurrence in order to protect the sincere policyholders. For this research, in-depth interviews were carried out with three main local insurance companies to particularly understand the countermeasures used, together with pointing out any possible effects that might arise with travel insurance fraud. Given that the Malta Insurance Association (MIA) represents the interests of insurers in Malta, a set of questions were also sent in order to gather information on whether they do assist their members to be in a better position to detect fraud. Surveys were also distributed to the Maltese citizens in order to examine the level of knowledge of the participants with regards travel insurance fraud and the negative effects that might come about. While local insurance companies can be considered as adequately equipped to identify fraudulent claims in general, it can sometimes prove to be complicated to discover wrongdoings in travel claims as compared to other classes of insurance. While results show that local insurers do collaborate between one other, there exists no fraud platform or database concentrated specifically for travel insurance. Given the success this measure achieved locally in respect to motor insurance, it would be a sensible idea if it was also extended to include personal lines and consequently travel insurance. Results also show that claims related to personal possessions and luggage are considered to be the most susceptible to fraud, and Maltese citizens consider criminal proceedings and the increase in premiums charges as the strongest effects of fraudulent claims. Educational efforts on the consequences of insurance fraud will not eliminate completely the incidence of fraud, but might be a step forward in having more informed and educated policyholders.