Introduction
Insurance fraud is the deliberate use of deception to get a benefit from an insurer that the person is not entitled to. In Australia it ranges from a householder adding an item to a genuine theft claim through to organised groups staging collisions and running the claims through cooperating suppliers. Most claims are honest. The small share that are not costs every policyholder, because the loss is recovered through premiums.
What follows is what counts as fraud in Australia, what it is thought to cost, the laws and bodies involved, and where the detailed articles on each type of fraud sit.
What insurance fraud means (plain English)
The Insurance Council of Australia describes insurance fraud as a broad range of dishonest conduct where the perpetrator intends to obtain a benefit by deception. That covers exaggerating a legitimate claim, misrepresenting facts, fabricating a loss, or manipulating the insurance process itself.¹
The ICA separates it into two kinds:
- Opportunistic fraud, the most common form, where a person with a genuine policy or a genuine loss inflates or bends the facts to their advantage
- Premeditated fraud, planned from the outset and often the work of professional fraudsters or organised groups¹
The distinction matters for detection. Opportunistic fraud shows up inside a single claim, in a value that does not fit or a detail that does not check out. Premeditated fraud tends to show up across claims, in the same people, vehicles, addresses or suppliers appearing more often than chance allows.
The main forms
Fraud can enter at any point in the life of a policy. The Knowledge Hub covers each form in its own article.
At the application stage: application fraud, where false information is given to obtain cover or a lower premium; fronting, where the main driver of a vehicle is misrepresented; and ghost broking, where an unlicensed person sells fake or manipulated policies.
At the claim stage: exaggerated claims, where a real loss is inflated; staged accidents, induced accidents and crash for cash, where the collision itself is arranged; and total loss fraud, which works on the valuation and salvage of written-off vehicles.
Around the claim: supplier and repairer collusion, and the use of synthetic documents and images, which the deepfake detection article covers.
What it costs
Precise figures are hard to come by, and it is worth being honest about that. The ICA’s own consumer page says the total cost is challenging to estimate and that an estimate of undetected fraud in the Australian market is not yet available.¹
The ICA has published two figures. In May 2024 it reported that its members detected $560 million of opportunistic insurance fraud in motor and property claims in 2023, and it put undetected fraud at around $400 million a year.² Both figures are the ICA’s, dated 2024, and cover general insurers’ motor and property lines.
In compulsory third party (CTP) insurance, NSW Government data reported in March 2016 put the increase that fraudulent claims were contributing to each Green Slip, the annual CTP policy every NSW motorist buys, at $75.⁸
Whatever the true total, the cost does not stay with the insurer. It is priced into premiums, which is why the ICA frames fraud as a cost to honest policyholders.¹
Who deals with it
Several parties are involved, and they have different jobs.
Insurers detect and investigate. Larger insurers run a Special Investigations Unit that takes referrals from claims teams and from detection systems. Under the General Insurance Code of Practice an insurer that appoints an investigator must tell the customer within five business days, follow the claims investigation standards in Part 15 of the Code, and have any investigation that runs past four months independently reviewed.⁴
The industry shares intelligence. The Insurance Fraud Bureau of Australia coordinates information exchange between insurers where fraud or a criminal act is reasonably believed to have occurred, and works with police on prosecutions.⁵ In May 2024 the ICA set up a counter fraud and scams function, led by a former NSW Police fraud squad detective, to build an industry-wide capability for detecting organised fraud networks.²
Regulators police the schemes they run. In NSW, SIRA works with insurers and NSW Police on CTP fraud and runs a CTP fraud hotline with the IFBA.³ In Queensland, MAIC receives reports of CTP fraud, refers them to insurers, and prosecutes where the evidence supports it.⁶
Police and courts deal with the criminal side. Fraud is prosecuted under state and territory criminal law, and in CTP schemes under the motor accident legislation as well. The penalties article sets these out.
Two other bodies shape how insurers behave. The Australian Financial Complaints Authority (AFCA) hears disputes when a customer disagrees with a decision, including a decision to decline a claim for fraud. ASIC and APRA set expectations for how insurers govern the systems, including AI, that they use to make those decisions.
The law in brief
Three provisions of the Insurance Contracts Act 1984 do most of the work. Section 13 makes every insurance contract one of the utmost good faith, on both sides. Section 20B places a duty on consumers to take reasonable care not to make a misrepresentation when they take out cover. Section 56 deals with fraudulent claims: the insurer may refuse to pay the claim, but may not avoid the contract on that ground alone, and a court can order a fair payment where only a minimal or insignificant part of the claim was fraudulent.⁷
The criminal offences sit in state and territory law, and the maximum penalties differ from one to the next. The ICA’s general description is that fraud is a serious indictable offence carrying up to ten years’ imprisonment, a substantial fine, or both.¹ The state provisions are in the penalties article.
How it is detected
Detection is probabilistic, not certain. Systems score claims and applications against rules and models, and refer the ones that look unusual to a person. The person decides. The Code requires insurers to review their non-genuine claims indicators at least once a year to make sure they remain relevant, appropriate and do not discriminate, and an investigator may not allege fraud without the insurer’s authority.⁴
Where organised fraud is involved, the strongest evidence is usually in the connections between claims rather than inside any one of them. The network analysis and link analysis entries explain why.
Reporting suspected fraud
Suspected fraud on a general insurance policy can be reported to the insurer concerned. CTP fraud in NSW can be reported through SIRA’s hotline with the IFBA.³ In Queensland, MAIC takes reports on 1800 CTP QLD, by email, or through an online form, and reports can be made anonymously.⁶
Related Topics
Special Investigations Unit (SIU)
Insurance Fraud Bureau of Australia (IFBA)
Industry Fraud Data Sharing in Australia
Claims fraud: detection, investigation, and prevention
Sources & further reading
¹ Insurance Council of Australia, Insurance fraud, insurancecouncil.com.au/consumers/insurance-fraud (read 22 September 2026)
² Insurance Council of Australia, Insurance industry boosts fight against fraud and scams, media release, 21 May 2024
³ NSW State Insurance Regulatory Authority, CTP insurance fraud
⁴ General Insurance Code of Practice, October 2023 update, paragraphs 73, 195, 196 and 231
⁵ kbs Intelligence, Insurance Fraud Bureau of Australia (IFBA), Knowledge Hub
⁶ Motor Accident Insurance Commission (Qld), CTP fraud (read 22 September 2026)
⁷ Insurance Contracts Act 1984 (Cth), sections 13, 20B and 56
⁸ Insurance Business Australia, Government taskforce to crack down on CTP insurance fraud, 4 March 2016, reporting NSW Government data
