Prevention of Insurance Fraud 防止保險詐騙

Beware of Becoming Partners in Crimes 當心成為犯罪同伙

Insurance fraud means using deception to obtain a benefit from an insurer that one is not entitled to, for example by making a false or exaggerated claim, deliberately causing a loss, or deliberately concealing or misstating material facts when applying for cover. In Hong Kong such conduct can amount to offences under the Theft Ordinance (Cap. 210), such as fraud or obtaining property by deception. It is a crime, not merely a contractual dispute.

Intermediaries stand between clients and insurers and know how proposals and claims are handled, so fraudsters often try to use them. An intermediary who simply 'does the client a favour', for example by leaving out an item of medical history or saying a loss happened after cover began, may be treated as aiding or abetting the fraud and share criminal liability with the client. 'The client asked me to' or 'I gained nothing' is no defence.

Apart from the criminal consequences, a licensed intermediary who takes part in fraud is no longer fit and proper. The Insurance Authority can take disciplinary action, including revoking or suspending the licence, imposing a pecuniary penalty or issuing a reprimand, and the appointing insurer may terminate the appointment. The cost of fraud is ultimately passed on through higher premiums paid by honest policyholders, and it damages the reputation of the whole industry.

The Insurance Intermediary and Examples of Insurance Fraud 保險中介人與保險詐騙的例子

At the proposal stage: helping or allowing a proposer to conceal material facts, such as a pre-existing illness or previous claims; filling in false answers or signing on the client's behalf; arranging for someone else to attend a medical examination in the proposer's place; and submitting proposals for fictitious clients to earn commission.

At the underwriting and premium stage: backdating a cover note or policy so that a loss which has already happened appears to fall within the period of cover; issuing forged policies or cover notes; and keeping premiums collected from clients instead of passing them to the insurer, leaving clients wrongly believing they are covered.

At the claims stage: helping a client to claim for a loss that never happened, exaggerating the amount of a loss, disguising an uninsured loss as an insured one, deliberately causing an accident (for example arson or a staged car collision), or hiding other policies so as to recover more than the actual loss from several insurers for the same loss.

Practical Steps in Preventing Fraud 防止詐騙的實際步驟

Know your client: meet the client in person where possible, check identity documents, understand their occupation, income and reason for buying cover, and consider whether the sum insured is in line with their financial position and the value of the subject matter.

Handle documents properly: let the proposer answer and sign the proposal form personally, and remind them that material facts must be disclosed truthfully. Never let a client sign a blank form, never sign for the client or alter their answers, and never backdate anything. Issue an official receipt for any premium collected and pass it to the insurer promptly as required.

Watch for fraud indicators, such as a claim made soon after cover starts or is increased; a sum insured out of line with income or the value of the property; a client unusually familiar with claims procedures or in a hurry to settle; reluctance to provide documents or insistence on cash; recent financial difficulty; and documents that show signs of alteration. An indicator does not prove fraud, but it calls for closer checking.

When something looks suspicious, report it truthfully under the insurer's or firm's procedures and keep a record. Do not turn a blind eye, and do not confront the client or let them know they are suspected, as this could allow them to cover their tracks. The intermediary is not an investigator: checking the facts is for the insurer or the claims staff it appoints.