With examples such as this where an entire wedding group conspired to make multiple claims in a coordinated fraud attempt (which ultimately failed), it is no wonder that fraudulent travel insurance claims, as reported here with inflated luggage values are increasingly common.
In the overview of payouts and policy fees from the insurers’ point of view, income must always exceed expenditure. Although insurers are obliged to assist peoples' claims, they are also not a charity.
The effect of this means that even honest customers who need to make a genuine travel insurance claim are treated very sceptically by insurers, until they can prove the elements of their claim are true.
Insurance Fraud Cycle
Another side effect is that as insurers’ expenditure on payouts increase, they will not hesitate to raise quotation prices and excess charges on their travel insurance policies.As these costs are passed on to the consumer, it creates a temptation for honest policyholders to turn bad and make fraudulent additions to their genuine claims, in order to negate the rising charges imposed by insurers. Clearly, this is a cyclical problem, and if the tit-for-tat reactionary choices continue, then there is only one way that insurance costs will go.
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