A new level of insurance fraud

Peccadillo or criminal offence? For some unscrupulous yacht owners the temptation to commit an insurance fraud is too inviting to resist.  This is particularly so when the scale of the fraud is large and professional in its execution.  Insurance companies have no tolerance when faced with such efforts to deceive and it’s a practice that is growing in the current financial crisis.

"In some instances the web of deceit presented to us is pretty elaborate."  Holger Flindt, Manager of the Loss Division of Pantaenius, has seen it all during his many years as a loss expert and specialist but one case that crossed his desk in mid 2008 was new even for Flindt:

A motor yacht insured at €180,000 through Pantaenius was reported stolen in Rostock, Germany. Enquiries at the marina, which should have been able to shed some light on the progression of events and the thieves themselves were to no avail.  The marina staff had never seen the yacht there. “That’s strange” thought Flindt and was reason enough to make further enquiries. At least there was evidence of a CE approval, a valid operating license as well as an entry in the ship's register at the District Court. The loss assessors at Pantaenius were all the more surprised when they found out that the stipulated shipyard in England was a letterbox company. "The yacht did not exist. It was never built, but had all necessary papers", Flindt mused.

But that's not all: At the same time the same owner had reported an identical yacht, which was insured with another insurance company, as stolen.  Both boats were furthermore financed by two different companies. "That's quadruple fraud and they probably invented another four imaginary yachts. Such an organisational effort requires a huge amount of criminal energy and is clearly a new level of insurance fraud", said the Loss Expert.

Flindt speculates that about ten percent of the reported loss volume is not legitimate. "Sad, but true: In my experience 1 in every 10 cases involving a total loss carries some evidence that the owner is somehow involved in the loss. "And he is convinced that this trend is unfortunately rising due to the current challenging economic climate.  As the used boat market is depressed at the moment it appears tempting to try and cash in on the insurance money rather than sell a boat below its historical market value.

In many cases the fraud is not usually so elaborately planned but simply an act of opportunism. "There is an accident and the boat springs a leak. The owner seizes his chance and lets his property sink without making any attempts at a rescue in order rid himself of the problem.  However, he has to explain to us why he watched for five hours without lifting a finger. In doing so he is violating his obligations to minimise his loss", states Flindt. 
"We are however very careful not to assume that fraud exists behind every unrealistic statement".  If a yacht suffers major damage, burns or even sinks, the owner sometimes sees the chain of events differently from the way they occurred - not intentionally, but just due to stress or confusion in the moment. Flindt: "Since such events are often associated with huge emotions for the owner, we try to support and advise him in all issues including salvage and, if appropriate, a suitable repair yard. This is not just beneficial for the client, but also for Pantaenius because we keep an overview on the costs and can get the aggrieved party through the claim settlement quickly and without complications.“

For this reason the Loss Division of Pantaenius considers itself much more of a service provider than a mere assessor of the damage. "Of course, this only applies for our honest clients which are in the vast majority.  We are not however to be tangled with in cases of fraud.  We need to protect our honest clients, because they have to pay for undetected fraud through the resulting higher premiums." Due to our extensive experience over many years in dealing with yacht losses as well as the worldwide loss network, Pantaenius is alert to to the conduct of fraudsters. So, those who are intent on attempting to perpetrate a fraud are ill advised to come to Pantaenius. "They should really think twice. Insurance fraud in severe cases can lead to imprisonment and then it really can’t be seen as a peccadillo", warns Flindt.

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