Burden of proof in insurance fraud: who must prove what?

Burden of proof in insurance fraud – who must prove what?

An insurer must substantiate the facts underlying an allegation of fraud. For forfeiture under Article 7:941(5) of the Dutch Civil Code, intent to mislead must be established; a mistake is not automatically fraud. You must still substantiate the insured event and the loss. Refusal of payment, recovery of money and an EVR registration each require separate assessment.

The starting point: the insurer bears the burden of proof

Dutch rules of evidence are based on the main rule that the party who relies on the legal consequence of certain facts bears the burden of proving those facts. In the context of insurance fraud this essentially means that the insurer who alleges that fraud has been committed must prove it. The burden of proof in insurance fraud therefore lies in principle with the insurer. Concretely, this means that the insurer must show that the insured intentionally provided incorrect information with the aim of misleading the insurer. A mere suspicion of fraud is insufficient. The insurer must present concrete facts and circumstances that substantiate the accusation of fraud. If the insurer fails to do so, it cannot refuse payment on the ground of fraud.

Article 7:941 paragraph 5 BW: the legal framework

The legal basis for refusing a payment because of fraud is Article 7:941 paragraph 5 of the Burgerlijk Wetboek (BW, the Dutch Civil Code). This provision stipulates that the right to payment lapses if the policyholder or the person entitled to payment has failed to comply with an obligation as referred to in the preceding paragraphs with the intent to mislead the insurer. The key words here are “intent to mislead the insurer”. It is not sufficient that the information provided was incorrect; the insurer must prove that the provision of incorrect information was intentional and aimed at deception.

What must the insurer prove?

The burden of proof in insurance fraud imposes a number of specific

The insurer must substantiate the breached information duty and intent to mislead. The statutory exception to forfeiture also needs consideration.

Provision of incorrect or incomplete information

First, the insurer must demonstrate that the insured actually provided incorrect or incomplete information. This can involve exaggerating the damage, inventing an incident, withholding relevant information when reporting the damage or falsifying documents. The insurer must substantiate the inaccuracy with concrete

means of evidence such as document analysis.

expert reports,

witness statements,

technical

investigation

Intent to deceive

Proof of intent to deceive is usually the most difficult part for the insurer. Intent is an inner state of mind that is not directly observable. The insurer must infer from the facts and circumstances that the insured had the intention to deceive. Factors to be considered include the nature and extent of the inaccuracy, the degree to which the insured should have known that the information was incorrect, any financial motives and the insured’s conduct during the investigation.

Purpose of the deception and the statutory exception

The question is whether incorrect information was provided with the intention of obtaining a payment that would otherwise not have been made. Successful deception is not a separate general requirement. Article 7:941(5) also contains an exception where the deception does not justify forfeiture. Any registration and its duration must be assessed separately. ECLI:NL:HR:2020:311.

The insured’s burden of proof

Although the primary burden of proof lies with the insurer, the insured also has an evidentiary position. The insured generally bears the burden of proof for the occurrence of the insured event and the extent of the damage. This means that you as an insured must demonstrate that a covered loss event occurred and the extent of the damage. In practice this leads to an interaction. If the insured shows that a covered event occurred, the attention shifts to the insurer, which must prove that fraud nevertheless occurred. The burden of proof in insurance fraud is therefore not one-way traffic but a dynamic process in which both parties must substantiate their assertions.

Evidence used by the insurer

Insurers use various types of evidence to prove fraud. Knowing these types of evidence helps you prepare your defence.

Expert reports The insurer regularly engages experts to assess the cause and extent of the damage. A fire expert can determine whether a fire was deliberately set or not, a motor vehicle expert can assess whether the damage fits the reported scenario and a structural expert can determine the extent of construction damage. The conclusions of these experts play an important role in the insurer’s evidentiary case.

Witness statements Statements from witnesses, neighbours, colleagues or other involved persons can be used by the insurer to contradict the damage report. Statements that the insured himself

has made during an interview with the insurer’s investigators can also serve as evidence, especially if those statements contain inconsistencies.

Technical and digital evidence

Insurers increasingly use technical and digital evidence. Think of CCTV footage, GPS data, phone data, bank statements and social media. If someone claims that their car was stolen while GPS data shows that the car was driven to a particular location, this forms strong evidence for the insurer.

Observations and private investigation

In some cases the insurer has the insured observed by an investigation agency. The results of observations may be used as evidence. The investigation must, however, comply with the AVG (the Dutch name for the GDPR): the insurer must have a legitimate interest, the method must be in proportion to that interest and there must be no less intrusive way to establish the facts (proportionality and subsidiarity). The Code of Conduct for Processing Personal Data by Insurers (Gedragscode Verwerking Persoonsgegevens Verzekeraars) sets out the privacy rules for insurers in more detail, and a private investigation agency engaged by the insurer must comply with the Privacy Code of Conduct for the private investigation sector (Privacygedragscode sector particuliere onderzoeksbureaus). The former Gedragscode Persoonlijk Onderzoek (Code of Conduct for Personal Investigation) was withdrawn on 1 January 2024, but may still play a role for investigations carried out before that date. Observations obtained in breach of these rules may be regarded as unlawfully obtained evidence. Whether the court then disregards them depends on the circumstances of the case.

Challenging the insurer’s evidence

If the insurer adduces evidence of insurance fraud, you have several options to challenge that evidence.

Counter-expertise

You can engage your own expert to conduct a counter-expertise. If the counter-expert reaches different conclusions than the insurer’s expert, this weakens the insurer’s evidentiary position. A difference of opinion between experts can be sufficient to sow doubt about the correctness of the insurer’s conclusions.

Challenging reliability

You can challenge the reliability of the insurer’s evidence. If the expert report contains methodological defects, if witness statements are contradictory or if technical evidence was obtained improperly, you can raise this as a defence. An experienced lawyer can critically analyse the insurer’s evidentiary case and identify weak points.

Illegally obtained evidence

If the evidence was obtained unlawfully, for example through observations without reasonable suspicion of fraud or through a breach of privacy, you can argue that this evidence should be disregarded. The judge will then weigh whether the use of the evidence, despite its unlawful acquisition, is nevertheless justified in the circumstances.

The difference between civil and criminal evidence

It is important to know that the burden of proof in insurance fraud in civil proceedings operates differently from criminal proceedings. In criminal law the principle applies that fraud must be proven “beyond reasonable doubt”. In civil law the judge applies a lower standard of proof: the evidence must be sufficiently convincing, but absolute certainty is not required.

This means that an insurer in a civil procedure may sometimes succeed in proving its case where a criminal conviction would not be achievable.

Reversal of the burden of proof

A reversal of the burden of proof requires a special legal rule or exceptional circumstances justifying a different allocation under Article 150 of the Dutch Code of Civil Procedure. Strong indications of fraud alone do not automatically reverse that burden. A court may instead provisionally accept evidence and permit counter-evidence: that is a different mechanism, with the insurer still bearing the risk of insufficient proof.

The role of Kifid (Klachteninstituut Financiële Dienstverlening, the Dutch Financial Services Complaints Institute) in evidentiary disputes

The Klachteninstituut Financiële Dienstverlening plays an important role in disputes about the burden of proof in insurance fraud. You can go to Kifid if you disagree with the way the insurer collected evidence or the conclusions drawn from it. The disputes committee of Kifid assesses whether the insurer has presented sufficient evidence and whether that evidence was obtained lawfully. Kifid has ruled on the burden of proof in insurance fraud in numerous decisions and thus offers a valuable source of guidance for insureds accused of fraud. A Kifid procedure is generally more accessible and faster than going to court. In addition, the costs for the insured are limited. It is, however, advisable to seek legal assistance even in a Kifid procedure, because the evidentiary aspects of fraud cases require specialist knowledge. A lawyer can help you optimally substantiate your defence and expose weaknesses in the insurer’s evidentiary case.

Collecting evidence for your own defence

In addition to challenging the insurer’s evidence, it is important to actively collect evidence that supports your position. This may consist of witness statements from people who observed the damage event, photos or video footage documenting the damage, invoices and receipts demonstrating the value of damaged goods and medical reports in the case of personal injury. The better you build your own evidentiary position, the stronger your defence against the insurer’s fraud allegation. It is wise to start collecting and securing evidence at an early stage. Evidence can be lost over time: witnesses forget details, digital data is overwritten and physical evidence can disappear. By carefully documenting and preserving evidence immediately after the damage event, you significantly strengthen your position in case the insurer later initiates a fraud investigation.

State-subsidised legal aid

A dispute about the burden of proof in insurance fraud requires specialist legal knowledge. If your income is limited, you may be eligible for state-subsidised legal aid. The Raad voor Rechtsbijstand (Legal Aid Board) grants subsidies to people with a low income, so that the government pays the bulk of the lawyer’s costs. You then pay only a limited personal contribution. This makes expert legal assistance accessible even if you do not have a large budget.

Have your case assessed by a specialist

The burden of proof in insurance fraud is a complex legal topic that has a major impact on

the outcome of your dispute with the insurer. A specialised lawyer can assess whether the insurer has provided sufficient evidence for its fraud allegation, whether the evidence was obtained lawfully and which grounds of defence are most promising in your situation. Have you been accused of insurance fraud and want to know how strong the insurer’s evidentiary position is? Contact us for a no-obligation assessment. Our lawyers analyse the available evidence, evaluate your defences and advise you on the best strategy to secure your entitlement to payment.