How Can I Avoid Travel Insurance Fraud?

What is travel insurance fraud?

Travel insurance fraud occurs when someone deliberately misleads an insurance provider in order to receive a payout or benefit, they are not entitled to. This could include, for example, making a claim for an incident that never actually happened. For example, reporting an incident that never actually occurred. Fraud is a significant challenge for the travel insurance industry, with fraudulent claims continuing to be a concern. Find out more about what travel insurance fraud is, how it could affect you, and what you can do to help avoid it below…

Who is at risk of fraud?

Unfortunately, anyone can be a victim of fraud. Travel Insurance providers are at risk of fraudsters submitting bogus claims to try and get a payout. This means that underwriters, claims departments, and brokers alike are at risk of travel insurance fraud. Some fraudulent claims can be sophisticated enough to bypass automated detection systems. In many cases, it is only through closer human review that unusual patterns are spotted, allowing potentially fraudulent claims to be identified.

Fraud is also a risk for travellers who can be victims of holiday booking fraud. This is where you book a holiday which seems genuine, only to arrive and find that your booking isn’t valid or the villa doesn’t exist. Ways to try to avoid this are checking reviews, verifying the web address and company name and even booking in store if possible. Another thing to look out for is whether or not you are ABTA or ATOL protected.

Does travel insurance fraud have an impact on ordinary travellers?

This year, overseas insurance fraud has jumped by 97%. When fraud levels shoot up like this, it means that insurers need to ‘tighten the rules’. For example, they may need to introduce additional steps in the claims process to help identify potential fraud early on. Another impact of increasing fraudulent claims is that the financial losses need to be covered. It may be that an insurer needs to raise insurance premiums to cover the losses suffered.

If you do have to submit a genuine claim, this doesn’t mean it will be rejected. In the event of an incident occurring abroad, make sure you keep appropriate records. Take photos if something is damaged, keep original receipts if possible and be precise. It’s important you are able to provide evidence for anything you are submitting a claim for.

Soft fraud vs hard fraud

Fraudulent insurance claims are generally categorised as either ‘soft fraud’ or ‘hard fraud’. These differentiate the varying types of fraudulent claims made. Hard fraud is when there is an intentional plan to put in a fake claim. Soft fraud is what happens when there may be genuine cause to submit a claim, but the details have been exaggerated. For example, if you needed to claim for lost luggage but add a tablet and other expensive items that weren’t actually lost to increase the payout.

Common examples of travel insurance fraud

A growing trend in travel insurance fraud is creating fake identities to take out policies specifically to make claims against. This often involves organised criminal gangs.

These fraudsters submit claims such as an accidental fall while on holiday with resulting medical expenses. However, these types of fraudulent claims often contain inconsistencies, such as destinations that don’t match the details provided, or a story that changes over time.

Another common fraud example is ‘free trip’ gimmicks. If you get contacted about a free trip, you should always tread with caution. If you haven’t entered any giveaways and it seems too good to be true, it probably is. Always verify the contact details against a reputable website before responding.

What if I make an honest mistake on my insurance?

When you are taking out travel insurance, it’s important to answer all questions honestly. When declaring your medical history, you should consider current and pre-existing medical conditions. This includes things like stable conditions that are managed by medication or any recent surgery for example. There is a difference between forgetting something, and deliberately omitting a medical condition.

If you receive your policy documents and realise you forgot to declare a condition, you should contact the insurance company as soon as possible. They will then discuss with you any other questions they may have and whether an additional premium is required to cover the condition. Many policies also have an ongoing health warranty. This means that if you develop a new condition after taking out an insurance policy, you should update them. Make sure you check your specific policy to see what you do and don’t have to declare.

What happens if I need to claim on my travel insurance?

If you need to submit a claim, you will need to follow the steps provided in your policy wording. If you need medical treatment abroad, the first step will be to contact the medical emergency number to get any costs approved. Claims for cancellation or lost luggage will involve contacting the relevant claims department. The rise of fraudulent claims should never put you off submitting a genuine travel claim. For example, if you need to cancel your holiday due to an unforeseen accident or close family bereavement. Claims submitted must be within the scope of your policy, so always check it meets your needs before buying. You should then follow the necessary claims steps and declare everything as clearly as possible.

Avoid travel fraud and travel with confidence

You should always proceed with caution when booking things like holidays and excursions. Use reputable websites with credible reviews to try and avoid scams. Take out travel insurance as soon as you book to ensure you have protection should anything happen. Specialist travel insurance providers like P J Hayman can cover most trip types and durations. Find out more and get a quote today.