Red Tape Hot Box on car insurance fraud

Although European Union membership is drawing closer every day, the country still lags in many "problem" areas which were supposed to be resolved before our accession. One of those unresolved laggards is auto insurance fraud.

The incidences of fraud committed every year here are surprisingly high. It has been estimated that every year €449 million (zł. 2 billion) finds its way into the pockets of those who commit fraud. There are several reasons for this, among them that some of the employees at insurance companies are quite keen on accepting bribes. The insurance police, which has been working for the largest insurance companies here for a few years, has discovered that on many occasions insurance coverage dates have been changed on policies and that agents fail to file the required documents for their clients. Thus, many of them are often suspected of corruption.

In addition, the exchange of client data among insurance firms is relatively poor, therby creating another loophole. Clients can then insure their cars with more than one company. And when they have an accident or intentionally wreck their cars, they file claims with all the firms.

The insurance companies say that their auto insurance premiums are relatively expensive (at an average of 10% of the value of the car), but they explain that it's the only way to compensate for the losses incurred every year by fraudulent claims.

Is there a way to change that? Yes, there is. In the United States and in EU countries, insurance firms efficiently exchange information among themselves about their clients or the accidents which involve insured cars. Therefore, it's impossible for claimants to receive money from several firms at the same time.

According to the Polish Insurance Department, we will also develop such a system in two years. Thus, all the insurance companies, large and small, will be able to verify where and when a person insured his car. Moreover, the insurance companies will be able to check data on illegitimate clients via the Internet. The aforementioned insurance department will collect this information.

Before this system is developed, however, insurance companies must continue to rely on the same methods they have been using up to now to prevent frauds. In the meantime, though, they will continue to lose billions to fraudulent claims.

Red Tape bugging you? Tell Mateusz about it at metdem@poczta.onet.pl.