What is claim farming? Here’s what you need to know

Claim farming is a practice that can affect people when they’re most vulnerable. It involves ‘claim farmers’ leading claimants to believe they’ll receive large payouts. Instead, they may face hefty fees. Let's delve into what claim farming is and what you can do to avoid it.

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What is claim farming?

Claim farming targets people who are likely to make insurance claims. It relies on the stress and confusion that often follows a car accident, personal injury, or even a natural disaster.

For example, ‘car crash scamming’ is a type of claim farming targeting Compulsory Third Party (CTP) insurance claims. A ‘claim farmer’ approaches someone who’s been injured in a car accident. They convince them to make a claim, even in circumstances where they may not have a genuine case.

A claim farmer may tell the injured person that they need to see a certain medical provider for their claim to proceed. Then, they refer them to that specific medical provider. It’s important to remember that an injured person can choose their own medical provider, general practitioner and legal representative. Also, the claim farmer may give the impression that they’re acting on an insurer’s behalf, when they’re not.

The claim farmer receives a fee for referring the claimant to a lawyer or ‘claim management’ company. If they lodge a claim, the claim management company may charge the claimant a hefty fee. However, the claimant may receive little compensation, or none at all.

How does claim farming work?

Claim farmers may use cold calling, emailing, social media messaging, or digital ads to find potential claimants.

They may promise a large financial payout or other enticing benefits to gain personal details. To gain trust, they may even pretend to represent an insurer or a government agency. Their tactics may be persistent and aggressive.

Once they’ve got personal details, a claim farmer may use them in the following ways:

Sell them on to an interested party, such as a legal firm or medical practitioner for a hefty fee,
Make a claim without the claimant’s permission, for their own financial gain,
Convince the potential claimant to file insurance claims for injuries or damages, even if they haven't suffered any.

To make their claims appear genuine, claim farmers may provide false evidence, such as medical reports. They may also collaborate with dishonest medical professionals, lawyers, or other parties who support their fraudulent activities.

How could this affect me?

Claim farmers can target anyone. Accidents are stressful situations where you might lower your guard. That’s when claim farmers aim to make contact, but you should always be wary of any unsolicited calls or emails. The effects of falling victim to claim farming can be wide reaching:

A claim farmer may convince you that you’re entitled to compensation when you might not be.
If you’re tricked into making a claim, you may spend time and effort pursuing it for nothing.
A claim management company may charge you a high fee for their services, reducing what you may have been entitled to receive.
Your insurance premium may increase. Claim farming generates an increase in claims, which can raise insurance premiums for everyone. When insurers receive a high volume of claims they may need to increase premiums to cover the costs.

Five tips to avoid claim farming

The good news is that by reading this article you’re already helping to combat claim farming. These tips may help you stay vigilant.

1. Be suspicious of cold calls

If someone calls you about an insurance claim offer, such as a large payout, be wary. Remember, if something seems too good to be true, it’s often a scam.

2. Keep your personal information personal

Don’t share your personal information with any unknown or unverified contact. If someone calls and pressures you to hand over personal information, hang up.

3. Seek reputable insurance companies

A consultant from a reputable insurance company, like Allianz, can guide you through the claims process. They’ll answer any questions you may have and can help you lodge your claim.

4. Stay informed

Make sure you understand your insurance policy, its terms and conditions, and how to make a claim. This may help you spot any issues that could identify potential claim farmers.

5. Record and report suspicious activities

If you suspect you’ve been targeted by a claim farmer, report it to the ACCC via Scamwatch or your CTP regulator.

Always remain vigilant and look after your personal details. Making sure you understand your insurance policy may also help you avoid the distress caused by claim farming.

At Allianz, our team includes dedicated claims specialists who can help you lodge your claim. We understand the impact that accidents and injuries can have on your life, and we'll make sure you get the support you need.

Need more information?

Claim farming practices may differ across Australia. For further information, check out these websites:

Disclaimer

This article has been prepared by Allianz Australia Insurance Limited ABN 15 000 122 850 AFSL234708 ("Allianz"). In some cases, information has been provided to us by third parties and while that information is believed to be accurate and reliable, its accuracy is not guaranteed in any way.

Any opinions expressed constitute our views at the time of issue and are subject to change. Neither Allianz, nor its employees or directors give any warranty of accuracy or accept responsibility for any loss or liability incurred by you in respect of any error, omission or misrepresentation in this article.

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