Malaysia Insurance Fraud Rising

Insurance fraud continues to be a significant issue in Malaysia, with millions of ringgit lost in scams each year. In the past five years, 97 cases of insurance fraud have been recorded, resulting in RM8.57 million in losses.

Common fraud schemes include staged accidents, false injury claims and even faked deaths. In some extreme cases, policyholders have resorted to arson to collect
insurance payouts. Fraudulent activities include criminal breach of trust by insurance agents, causing RM3.26 million in losses, and false claims against the Social Security Organisation, totalling RM4.95 million. The most common fraud involves false accident claims, which have led to losses of RM226,402.10.”

General Insurance Association of Malaysia underscored the importance of vigilance in a world in which fraudsters are increasingly using advanced technology, including artificial intelligence, to deceive victims. Insurance fraud is a crime that affects everyone, leading to higher costs of goods and services, and resulting in insured properties being unnecessarily damaged or not repaired properly.

The association encouraged the public to use the Semak Mule system and the National Scam Response Centre hotline 997 to verify bank accounts and report suspicious activity. The insurance industry is making strides in preventing fraud with systems such as the Fraud Intelligence System, which tracks fraud patterns across insurers, and the Claims and Underwriting Exchange system, which allows insurers to cross-check policies and claims.

Limited resources make fraud investigations challenging. Consumers need to ensure their agents are legitimate by checking their credentials on Bank Negara Malaysia’s approved list of agents.

Health insurance scams, particularly those targeting Takaful policyholders, have become more sophisticated. Fraudsters often impersonate legitimate Takaful operators, phishing for personal and banking details through fake calls, emails and messages under the guise of updating records or offering exclusive benefits.

Malaysian Takaful Association advised consumers to verify agent credentials through the association’s online registry. Avoid cash payments and always pay premiums directly to the insurance company or Takaful operator while encouraging policyholders to be cautious about sharing personal information.

By staying informed, verifying agents and promptly reporting suspicious activities, Malaysians could better protect themselves from falling victim to insurance fraud.