Travel scams, and a spate of car burnings

The biggest increase was in fire and general insurance claims. Photo / Supplied

An increase in fraudulent claims for travel insurance and a spate of car burnings has bumped up the number of complaints made to a watchdog who handles insurance disputes.

The Insurance and Savings Ombudsman, Karen Stevens, fielded 284 complaints in the 2009/10 year - a 17 per cent increase on the previous year's 242.

The ombudsman's office receives close to 2000 inquiries every year but only investigates complaints that have reached a deadlock between the consumer and the 50 insurance companies it covers.

Ms Stevens said it was hard to pinpoint why there had been a significant increase in complaints in the past few years but it was most likely linked to tougher economic conditions.

"Consumers are more inclined to push for what they believe they are entitled to while companies are scrutinising claims," she said.

The biggest increase was in fire and general insurance claims which had gone from 142 to 194 in the past year.

Ms Stevens said an increase in travel insurance disputes had been a key driver with fraud and pre-existing health conditions common reasons for companies turning down a complaint.

"People go overseas and make complaints when they come back. A few years ago they might have thought they wouldn't bother. There have also been more issues of fraudulent claims through exaggerated losses or claims for something they didn't have."

Ms Stevens said there had also been a run of stolen and burned out vehicles last year.

"We haven't had a run like that for a while," said Ms Stevens, who has been ombudsman for the past 12 years.

"People in difficult financial circumstances looking for a way out are more likely to make a claim than in better financial circumstances," she said.

Cases were only considered to be fraud when there was a deliberate intention to deceive, she said.

In most cases the fraud did not go beyond the insurance company who either accepted the claim or turned it down.

The police did not have the resources to investigate civil fraud cases, Ms Stevens said: "It's a real issue for the insurance industry."

Fraudulent claims also pushed up the cost of premiums for all those who bought insurance.

Ms Stevens said it was likely the fraud complaints received by the ombudsman were only the tip of the iceberg.

"The companies would probably see it a lot more than what we would."

The ombudsman said she expected complaints to continue increasing next year as a result of the Christchurch earthquake and because all financial service providers had to register with an approved disputes body.

Of the 277 complaints investigated, only 14 per cent or 38 were upheld, seven were partly upheld and 45 were settled. The majority, 187, were not upheld.