When an insurer accuses you of fraud, your world is turned upside down. You filed a claim because you suffered loss, but instead of a payout you receive a letter stating that your insurer suspects fraud. This is a situation that occurs more often than you think and can have far-reaching consequences for your financial position and your future. In this article you will read exactly what you can do if your insurer accuses you of fraud, what rights you have and how best to defend yourself.
What does an accusation of fraud by your insurer mean?
An accusation of insurance fraud means that your insurer suspects you deliberately provided incorrect or incomplete information to obtain a payout to which you are not entitled. This can involve exaggerating damage, inventing an incident or withholding relevant information. Insurers have specialised units that investigate possible fraud and they use advanced investigative methods. It is important to realise that an accusation is not yet proof. Insurers sometimes too quickly state that fraud has occurred, while in reality there may be a misunderstanding, a communication error or a difference of opinion about the extent of the damage. Nevertheless, you should always take such an accusation seriously, because the consequences can be enormous.
Consequences of an accusation of fraud by the insurer
If your insurer accuses you of fraud, the consequences can be very far-reaching. First, the insurer can decide to reject your claim entirely.
In addition, the insurer can immediately terminate your policy, leaving you without insurance cover. The insurer may also record you in its own incident register (Incidentenregister) and, if the stricter requirements of the Protocol Incidentenwaarschuwingssysteem Financiële Instellingen (PIFI, the Dutch protocol for the incident warning system of financial institutions) are met, in its Extern Verwijzingsregister (EVR, external referral register). Registration in the EVR has far-reaching consequences. When you apply for a product, other participating financial institutions can see that you are registered, although they cannot see why. This can make it harder to obtain new insurance, or mean that you can only obtain it on different terms. Moreover, the insurer can reclaim previously paid benefits and in serious cases even report the matter to the police.
Registration in the Extern Verwijzingsregister
The Extern Verwijzingsregister is part of the warning system of financial institutions governed by the PIFI. Each participating institution keeps its own EVR, linked to its incident register. For insurers, the referral application runs at Stichting CIS, which acts only as a processor. When other institutions consult it, they only receive a notification that you are registered in the EVR, not the reason. A registration can remain for a maximum of eight years and has a major impact on your ability to obtain insurance during that period. It is therefore crucial that you contest an unjust registration.
Your rights when accused of fraud
As an insured person you have rights that protect you against unfounded accusations. In principle, the insurer bears the burden of proof and must demonstrate that fraud actually took place. A mere suspicion is insufficient. The insurer must present concrete facts and circumstances that substantiate the allegation of fraud.
In addition, you have the right to inspect the investigation file. Under the Algemene Verordening Gegevensbescherming (AVG) — the EU General Data Protection Regulation (GDPR) — you can request the insurer to allow you to inspect all personal data collected about you. This also applies to investigation reports and interview notes. By requesting access to the file you can assess on what grounds the insurer accuses you of fraud and whether those grounds are sound.
The principle of proportionality
Insurers are bound by the principle of proportionality. This means that the measures taken by the insurer must be proportionate to the seriousness of the irregularity found. Completely cancelling a policy and registering in the EVR for a relatively minor mistake can be disproportionate. Courts often review in disputes whether the insurer acted proportionately.
What can you do if the insurer accuses you of fraud?
The first and most important advice is: do not act hastily. Do not take any steps without first seeking legal advice. Anything you say or write can be used against you at a later stage. Below you will find an overview of the steps you can take.
Step 1: Take the accusation seriously
No matter how unfounded the accusation may feel, always take it seriously. Do not ignore letters or calls from the insurer. By not responding, the insurer may unilaterally take measures without you having the opportunity to present your side of the story.
Step 2: Gather all relevant documents
Make sure you gather all documents that relate to your insurance and your claim. Think of policy conditions, correspondence with the insurer, damage reports, photos and any witness statements. These documents form the basis of your defence against the fraud accusation.
Step 3: Request access to the investigation file
Use your right of access under the AVG. Ask the insurer for all information collected about you, including the investigation report and any statements from third parties. Only when you know on what the accusation is based can you mount an effective defence.
Step 4: Engage a lawyer in good time
A lawyer with experience in insurance law can assess your situation and advise you on the best strategy. A lawyer can communicate with the insurer on your behalf, object to an EVR registration and, if necessary, start proceedings before the court or the Klachteninstituut Financiële Dienstverlening (Kifid) — the Dutch complaints institute for financial services. It is advisable to obtain legal assistance as early as possible to strengthen your position.
Defence against an accusation of insurance fraud
There are various grounds of defence you can raise when your insurer accuses you of fraud. Which defence is most promising depends on the specific circumstances of your case. Below the most common defences are discussed.
Insufficient evidence of fraud
The insurer must prove that you intentionally provided false information. If the insurer only has suspicions or indirect evidence, this may be insufficient to substantiate the accusation. An experienced lawyer can critically assess the insurer’s evidence and expose weak points.
Misunderstanding or communication error
In many cases there is no deliberate fraud but a misunderstanding. You may have misunderstood a question on the application form or omitted information because you did not know it was relevant. A good substantiation of the misunderstanding can refute the fraud allegation.
Disproportionate measures
Even if the insurer can demonstrate that an irregularity occurred, the measures taken must be proportionate. Registering in the EVR for eight years due to a small error may not be justified. A court can shorten the registration period or annul the registration entirely if it is disproportionate to the offence.
The role of Kifid in fraud accusations
The Klachteninstituut Financiële Dienstverlening (Kifid) handles consumer complaints against financial service providers, including insurers. If you cannot reach an agreement with your insurer, you can file a complaint with Kifid. Kifid’s Disputes Committee (Geschillencommissie) then gives a ruling. For consumers, that ruling is non-binding, unless both you and the insurer choose binding advice. This is often a faster and cheaper route than court proceedings, although it is advisable to seek legal assistance for a Kifid procedure as well.
Deadlines and limitation periods
When accused of fraud by your insurer, it is important to pay attention to deadlines. If the insurer relies on incorrect information given when the insurance was taken out, it must point this out to you within two months of discovering it. Only within those two months can it cancel the insurance with immediate effect on the grounds of intent to deceive (Articles 7:929 and 7:930 of the Dutch Civil Code, BW). If the alleged fraud concerns a claim, the consequences for the policy follow from the policy conditions and Article 7:941(5) BW. If the insurer reclaims an earlier payment as undue payment, that claim is in principle time-barred five years after the insurer became aware of the claim and of you as the recipient, and in any event twenty years after the claim arose (Article 3:309 BW). Your own claim for payment becomes time-barred three years after you became aware that it was due; a written claim interrupts that period, and after an unambiguous rejection a new period of three years begins (Article 7:942 BW). A lawyer can advise whether the insurer acted in time and whether certain claims may be statute-barred.
Protection of your privacy during the investigation
During a fraud investigation by the insurer a lot of personal data is collected. The insurer is bound by privacy legislation and may not collect more data than necessary for the investigation. A personal investigation, for example by a private investigation firm, is only permitted if it is proportionate to its purpose and there is no less intrusive way to establish the facts (proportionality and subsidiarity). If you suspect that your privacy has been violated during the investigation, you can file a complaint with the Autoriteit Persoonsgegevens — the Dutch Data Protection Authority.
When is there actually insurance fraud?
It is good to know when, legally speaking, there is actually insurance fraud. Article 7:941(5) of the Dutch Civil Code (Burgerlijk Wetboek) states that the right to a payout lapses if the insured gives an incorrect account of the facts with the intent to deceive the insurer. Therefore there must be intent to deceive. Accidentally providing incorrect information usually does not fall under this provision. The line between a mistake and intentional deception is not always sharp. The circumstances of the case play an important role in the assessment. A judge looks, among other things, at the nature of the incorrect information, the extent to which the insured should have known the information was incorrect and the possible financial benefits the insured sought to obtain.
Tips to prevent problems with your insurer
Prevention is better than cure. To avoid a situation in which your insurer accuses you of fraud, it is wise to always be honest and complete when filling in application forms and damage reports. Keep copies of all correspondence and take photos of damage before you have it repaired. Report damage as soon as possible and always give an honest statement of the value of damaged or stolen goods.
Legal assistance and legal aid
Many people forego legal assistance because they think a lawyer is too expensive. Did you know that you may be eligible for subsidised legal aid? If your income is limited, you can apply for a legal aid supplement via the Raad voor Rechtsbijstand. This means that the government will cover most of the lawyer’s costs. You then only pay a limited personal contribution. In this way legal assistance is also accessible if you do not have a large budget.
Engage legal help in time
An accusation of insurance fraud can profoundly affect your life. From losing your insurance cover to a years-long registration that prevents you from taking out new insurance. It is therefore crucial that you do not accept an unfounded accusation. A lawyer can make the difference between an unjust registration that remains for years and a successful defence of your rights.
Has your insurer accused you of fraud and do you want to know what your options are? Contact us for a non-binding conversation. Our lawyers handle disputes with insurers and are happy to help strengthen your position. We assess your situation, advise you on the best approach and assist you in communication with your insurer. Do not wait too long, as speed is often crucial in fraud allegations.
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