RM1b lost yearly to fraud, say adjusters

Insurance adjusters in Malaysia estimate that fraudulent motor insurance claims cost the country RM1 billion each year, according to the Association of Malaysian Loss Adjusters (AMLA). The most common types of fraudulent claims involve accidents, vehicle thefts, fires, and staged collisions. AMLA chairman Y.K. Foo noted that while most claims submitted to insurers are genuine, fraud remains a persistent issue.

Adjusting firms handle about 200 suspicious cases requiring formal investigation per year, of which roughly 40 to 50 percent are confirmed as actual fraud after thorough inquiries.

AMLA has 41 members, with nearly half specializing in motor insurance fraud investigations. Fraud schemes range from opportunistic individual policy breaches to more organized syndicate operations. At the individual level, common tactics include claiming lapsed policies, staging fake multi-vehicle crashes, and faking or exaggerating personal injuries.

In recent years, arson incidents have risen to about 20 cases annually per firm, making it harder to gather evidence compared to earlier claims involving vehicles being driven into water bodies. Foo warned that unscrupulous people take advantage of drivers' panic at accident scenes to initiate fraudulent claims, often towing vehicles to unapproved locations to cause secondary damage or re-impact them to inflate claim amounts.

To combat these issues in the long term, AMLA advocates for better information-sharing among insurers, adjusters, law enforcement agencies, and medical institutions. By developing a process for quickly and securely sharing legitimate claim information, industry stakeholders could work together to reduce fraud and keep consumer premiums within a controlled percentage.