What is the penalty for insurance fraud?

Insurers are increasingly having to deal with insurance fraud. Recently, a record number of insurance fraud cases was even reported. Insurers want to crack down on fraud. That’s why the penalties for fraudsters are quite severe. But what exactly is the penalty for committing insurance fraud?

Multiple Penalties for Committing Insurance Fraud

A penalty may sound very serious, but there are significant consequences for committing insurance fraud. Of course, this depends on the nature and severity of the offense. Large-scale insurance fraud carries a harsher penalty than lying on an insurance application. Insurance fraud can have the following consequences:

No compensation for damages

If insurance fraud is detected, the insurer will not pay out any compensation. In many cases, they will refuse to pay the entire claim, even if only a small portion of it involves fraud. For example, if your home was burglarized and you include a cell phone in your claim that wasn’t actually stolen. If the insurer finds out, it may refuse to pay the entire claim—even if other items were actually stolen. In that case, you’ll end up with higher costs than if you hadn’t lied about that cell phone.

A fine of €532

Since 2016, anyone who commits insurance fraud has been subject to a standard fine of €532. This fine is imposed by the Direct Liability Service Organization (SODA). The Dutch Association of Insurers established this fine to crack down harder on systematic fraudsters. In addition, they hope this fine will deter potential insurance fraudsters.

Paying for Research Costs Yourself

If an insurer suspects fraud, it must be able to prove it. That is why an insurer always launches an investigation when fraud is suspected. These investigation costs can sometimes be quite high, for example, if an external investigative firm or an expert must be hired. Once the insurer has determined that fraud has indeed been committed, the investigation costs are recovered from the fraudster. This is only fair, because if the fraudster had not committed fraud, there would have been no need to launch an investigation in the first place.