The Insurance Council of Australia has commissioned an independent forensic investigation to reveal the scale of undetected claims fraud. 

A report is expected to be published soon, council counter-fraud CEO Andrew Gill told the Insurance News Beyond the Buzzwords conference in Sydney yesterday.

ICA members detected $560 million of opportunistic insurance fraud across motor and property in 2023. Undetected fraud is thought to cost the industry about $400 million a year – a figure Mr Gill says is “quite a conservative estimate”.

“Where there is opportunity, you will always get fraud. If your systems fail, you will be exploited quickly and, in the modern world, news of systems failing can spread incredibly quickly, and losses will only get bigger until that problem is solved,” he said.  

“Insurance fraud is a global phenomenon ... Things that highlight weaknesses in controls can spread like wildfire.”

ICA’s fraud team has more than 10 multi-insurer investigations under way, involving millions of dollars across motor, home and contents, pet and travel insurance.  

Data sources reviewed to detect fraud include documents, images and voice recordings, and Mr Gill says emerging technology is moving the industry towards “dynamic identification of evolving fraud trends”.

“We’re going to be comparing 100 million data points against each other all the time. It’s literally impossible for a human to do,” he said.

Mr Gill’s team liaises with police, which “may be investigating anything, including arson, money laundering or staged collisions”.

“Through the provision of that consolidated industry view to law enforcement, we’re arming them with all the pieces of the jigsaw puzzle,” Mr Gill said. “By showing the full extent of that criminality, our aim is to get a proportionate response to make sure that we’re sending the right deterrence message to organised criminals who are targeting insurance products.

“We've identified really organised fraud that occurs across insurers – that network fraud that we’re looking for.”

Criminals are early adopters of technology, Mr Gill says, and it is “a bit of a no-brainer that the industry has to do the same thing as well to stay one step ahead”.

If criminals are “constantly disrupted and the expenses become too great, they will move elsewhere. Effective fraud prevention measures are really quickly communicated among the criminal cohort.

“A key pillar of what we’re aiming to do is to emphasise where we have taken action against people, to spread that deterrent message.”