Fraud in Car Insurance Claims

With rising number of accidents yearly, the number of car insurance claims and premiums has also been climbing almost continuously during the last decade. This is done to such an extent that when a claim is made, one may not even know that it is all a fraud. However, not everyone is fooled by such scams.

One such person is Mr. Henry Phua, a 60 year old Ship broker who was involved in a fairly minor accident in 2007. He was shocked when the other party filed a five-figure motor insurance claim that included $8,000 for “whiplash”. Not believing that he was at fault, he lodged a police report.

Police investigation showed that a motor workshop together with three other parties was involved in the scam, and all have been hauled up for questioning. The first was the car driver who was involved in the accident. The second man was said to have purportedly witnessed the accident, and the third man is believed to be someone from the motor workshop. On top of that, the workshop was assumed to have even helped in arranging for a false witness to make a claim.

Despite learning from his insurer AIG that the other party had a witness, Mr. Phua stood his firm and continued to contest the claim, obstinate that the other driver was exaggerating his claim.

At first, the other driver stuck to his story. However, halfway through questioning, he had trouble elaborating how the accident occurred and suddenly changed his story, admitting that Mr. Phua’s version of the accident was correct. Apparently, there was no witness and the supposed witness had been arranged by “a friend’s friend”.

This case is among many of the complaints on fraudulent motor insurance claims and staged accidents that the police have been receiving. On top of that, motor insurers have been citing this as the main reason for underwriting losses and higher car insurance premiums.

This can be seen from the rising car insurance claims and premiums. In 1998, the average premium was $672, while claims amounted to $375 million. However just last year, premiums averaged $1,013, while claims hit $741 million.

Click HERE for full news report