CZECH REPUBLIC: Insurers uncover frauds for CZK 1bn in 2013, up 2% yr/yr

21 February 2014 —
Insurance companies in the Czech Republic uncovered frauds for over Kc1bn last year, 2 percent higher than in 2012, and the number of suspicious cases that they checked grew by 73 percent to 10,600, the Czech Insurers Association (CAP) informed CTK Tuesday.

"Insurers investigated a much higher number of cases of suspicion of insurance fraud last year but the average size of the damage was lower," said Ondrej Karel, an expert in the prevention of insurance frauds.

The highest number of insurance fraud cases was uncovered in motor vehicle insurance where after a decline in 2012 the number of the investigated cases jumped by over 82 percent. The size of the proven value was near Kc400m.

The highest volume of over Kc458m was in property insurance. The volume was 19 percent lower than in 2012 but the results in this area were influenced by the uncovering of one serious fraud where the proven value reached Kc100m, Karel explained.

The highest year on year growth in the proven value was in insurance of persons where the value more than doubled. The number of these cases rose by 70 percent to 2,214 and the proven value reached over Kc227m. These were frauds in life and accident insurance, as well as compensations for medical treatment by travel insurance.

"Insurance of persons is attractive for fraud not only for clients but also for insurance mediators," Karel said.

According to estimates of CAP members, 70 percent of the proven value in this segment are frauds linked with gaining commission for the mediator. This fraud is committed by the mediators or by them in cooperation with clients, Karel noted.

Global statistics show that roughly every seventh case reported by clients is a fraud.

Courts in the Czech Republic send to jail hundreds of perpetrators annually. They can be sentenced for 10 years in prison at most.

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