Why millions of Australians are committing insurance fraud

Is insurance fraud a victimless crime? Photo / 123RF

When Kate* lied about her backpack being stolen overseas so that she could claim a travel insurance payout, she never even considered she was stealing.

The 28-year-old Sydneysider was holidaying in Europe and needed some extra cash, so she told police her bag had been lost and made a fraudulent claim with her travel insurance company.

She said her laptop, phone, camera and wallet had been stolen, and she received a payout of around A$4000 from her travel insurance provider.

"Of course you feel a bit bad, but I never really thought of it as stealing, because it was such a big company," she told news.com.au.

"You pay a lot of money for insurance so I didn't feel that bad — I justified it by thinking that insurance companies steal from us in a way by charging such a lot of money.

"I didn't think I was hurting anybody — I just thought of it as a way to get my money back from a big company."

Kate said she considered her actions to have been a "victimless crime".

"I never really considered that what I did would have any impact on any real people," she said.

Unfortunately, it turns out Kate's story is far from unique.

According to new research from finder.com.au, 1.3 million Australians have committed insurance fraud at some point in their lives.

The survey of 2010 adults found 7 per cent of insurance policyholders have lied on an insurance application, with 17 per cent of Millennials committing insurance fraud, compared to just one per cent of Baby Boomers.

The research found Aussies were most likely to lie when it came to car insurance, health insurance and life insurance.

NSW is the most dishonest state in the country, with one in 10 of us lying on an application, while 9 per cent of men admit to committing insurance fraud compared to 6 per cent of women.

Finder.com.au insurance expert Bessie Hassan said it was a worrying trend.

"Even if telling the truth could increase premiums, it's worth being upfront as the alternative could have serious consequences," she said.

"Insurance brands have claims investigators so it's likely they'll find out if you've lied, and it goes without saying that dishonest claims will be denied.

"Whether it's pre-existing conditions, no-claim bonuses or even your age, lying isn't worth the rejected claim if something does go wrong."

Hassan said there were ways to lower premiums and save money without resorting to dishonesty.

She urged consumers to compare a range of different policies online before signing up, and to see if your chosen insurer offered a discount for buying online.

Some insurance brands offered multi-policy discounts when clients took out more than one policy with them, while it was worth asking for a discount or a more competitive price before switching insurance brands, Hassan said.

She added that installing extra security measures could also help to lower home insurance premiums.

* Name has been changed to protect the individual's identity.