What are the potential consequences of insurance fraud?

Insurers take insurance fraud very seriously. If an insurer suspects fraud, it may launch an investigation into the insurance claim or application. If it is discovered that you have committed insurance fraud, this can have serious consequences. Here, we explain the consequences of insurance fraud.

#1 Termination of the Insurance Policy

The insurer will almost always cancel the policy involved in the fraud. For example: you reported a broken cell phone as stolen while on vacation. If the insurer discovers this, there’s a good chance they’ll cancel your ongoing travel insurance immediately. Do you have any other active policies with the same insurer? If so, they’ll assess whether to cancel those as well. Committing insurance fraud undermines the insurer’s trust in you. They can no longer be certain that you will adhere to the agreed-upon insurance terms, and therefore almost always choose to terminate all your current insurance policies. Insurance fraud thus affects all your insurance policies, not just the one involving the fraud.

#2 Coverage is denied

If insurance fraud is detected, an insurer will always refuse to pay the claim. It’s even possible that an entire claim will be denied, even though only a small portion of it involved fraud. Imagine that your home is burglarized. A number of items are stolen, including a television and some jewelry. When filling out the claim form, you decide to list an extra cell phone as stolen. A nice bonus, right? Not really, because if the insurer finds out, it can refuse to pay the entire claim. The insurer won’t cover the damages, and you’ll be left with a lot of expenses.

#3 Entry in the insurer's fraud registry

If your insurance policy has been terminated due to insurance fraud, the insurer will record your information in its database. Many people confuse this with a so-called“blacklist.” Insurers do not maintain a blacklist of individuals, but they do record when and why a policy was terminated. This is intended to alert their own organization and ensure that you cannot take out another policy with them. Internal records are not visible to other insurers.

#4 CIS Registration

An internal record is not visible to other insurers, but a CIS record is. CIS stands for Stichting Centraal Informatie Systeem ( Central Information System Foundation ). Their database stores all insurance data that is important to share with insurers. It records not only insurance fraud, but also delinquent payers, driver’s license suspensions, and criminal histories. Insurers and authorized representatives can enter this data into the national database. The purpose of the database is to make potential risks manageable for insurers and to prevent fraud as much as possible.

If you ’re registered in the CIS, it’s difficult to take out a new insurance policy. Before an insurer accepts an insurance application, it always checks the CIS database. Are you registered for insurance fraud? If so, there’s a good chance they’ll reject your application. You’re simply too big a risk for the insurer. With a CIS record, your only real option is the insurance company De Vereende. De Vereende specializes in insuring unusual situations and risks. Thanks to their broad underwriting policy, you can still take out insurance even if you have a record of insurance fraud.