Car Insurance Fraud in Saudi
Fraud touches many facets of business, particularly within the insurance industry. According to SAMA, fraud is “any act involving deceit to obtain a direct or indirect financial benefit by the perpetrator or by others with his help, causing a loss to the deceived party.” Basically, car insurance fraud occurs when someone attempts to exploit their insurance coverage to gain or profit illegally.
Hardly ever is insurance fraud a victimless crime, as it affects insurance companies, individuals, and the entire society financially. According to Dr. Mohammad Alsuliman, CEO of Najm for Insurance, the total cost of car insurance fraud totaled around SR 250 billion in 2019. Ultimately, the rise of fraud cases could also raise insurance rates for everyone in Saudi. Thus, everyone should be aware of fraud prevention: what it is & why it matters.
Types of Car Insurance Fraud
In reality, car insurance fraud comes in a variety of shapes and sizes, from providing false information on your insurance claim to profit to staging accidents deliberately. For this reason, dash cams are becoming increasingly popular in Saudi. Here are few examples of what is considered fraud when you file a car insurance claim:
- Replacing drivers involved in accidents with someone who’s insured or older – Beware! you could face legal charges and a fine of 10,000 SR.
- Providing false information about the accident or falsifying official documents.
- Exaggerating and inflating the damage or injuries sustained.
- Using personal cars for business, learn about car insurance exclusions.
- Staging an accident to cause damage or destruction to the insured car intentionally – this also includes theft and arson.
- Reporting old or pre-existing damage.
How Najm Detects Fraud
In 2019, Najm formed a partnership with SAS to detect insurance fraud. Utilizing Artificial Intelligence and Machine-Learning technologies, Najm aims to improve investigations efficiency and develop better quality alerts for its investigators. Ai can aid Najm investigators in two ways:
- Ai is used to continuously monitor behavior to look for patterns indicating large-scale fraud. A person making multiple claims, or has a history of suspicious claims – is a potential red flag that Ai can highlight for further investigation.
- Also, Ai can assess the accident, classify car damage, and estimate costs/
As a consumer, you too can help prevent fraud and protect yourself:
- Inform Najm’s investigator of any discrepancies in the description of the accident.
- Avoid conspiring with other drivers who offer to transfer the responsibility to another person, or ask you to be liable for the damage.
What Are the Consequences of Fraud?
- Facing criminal charges
- Cancellation of insurance policy
- Not receiving compensation for a fraudulent claim
- Losing your No Claims Discount (NCD)
- Canceling your car insurance policy and losing coverage.
Worst of all is being a victim of insurance fraud. Often, “ghost brokers” offer attractive car insurance claiming they can get you cheap car insurance. However, these dishonest agents might use false information or alter your car insurance policy. In other cases, ghost brokers will provide a legitimate policy, but will be quick to cancel the policy and pocket the refund for themselves. Only when an accident occurs, you find that you have no insurance to pay your claim and must cover the loss on your own.
To protect yourself, get your car insurance from a licensed company in Saudi.
Don’t become a victim of car insurance fraud, DIY!
To protect yourself from falling victim to these scams, it is highly recommended to use licensed price comparison websites. These platforms provide a reliable and secure way to compare car insurance offers from reputable companies, ensuring that you receive the best coverage at a fair price. Use a licensed price comparison website to avoid the schemes of ghost brokers and make informed decisions when it comes to your car insurance needs. Stay vigilant, stay informed, and stay protected!