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Determination
Case number | 12-00-1007692 |
Financial firm | QBE Insurance (Australia) Limited |
Case number: 12-00-1007692 8 October 2024
The complainant held a home and contents insurance policy with the financial firm (insurer). He lodged a claim for fire damage to his home and contents in September 2018, which the insurer accepted in February 2020.
The complainant also made a claim for theft of contents that had been left in the fire damaged home (theft claim). The insurer denied the theft claim. On 17 December 2021, AFCA determined in case 788318 that the insurer had to accept lodgement of the theft claim and assess it.
Following investigations, the insurer says the theft claim has been made fraudulently meaning it is entitled to deny coverage under section 56 of the Insurance Contracts Act, 1984 (Cth) (ICA). It says the complainant has submitted falsified documents as purported proof of ownership and loss.
The complainant denies the theft claim is fraudulent and seeks payment of the contents sum insured.
The complainant is represented by lawyer IH. For brevity’s sake, the complainant and IH will be referred to below as ‘the complainant’ unless context requires otherwise.
Yes. Based on the exchanged information, I am satisfied it is more likely than not that the complainant knowingly falsified documents with the intention of obtaining financial gain from the insurer.
Yes. The fraudulent part of the theft claim is not minimal or insignificant. A full denial is not harsh or unfair in the circumstances.
The outcome is fair because the insurer has established that a not insignificant part of the theft claim has been made fraudulently.
This determination is in favour of the insurer.
The insurer is entitled to deny the theft claim. It is not required to take any other action.
Yes. Based on the exchanged information, I am satisfied it is more likely than not that the complainant knowingly falsified documents with the intention of obtaining financial gain from the insurer.
In case 788318, AFCA determined that the theft of contents from the fire damaged home likely occurred sometime between 12 September 2018 and 3 October 2018.
The parties disagree on when the complainant first notified the insurer of the theft. The insurer says the first time it became aware of the incident was in April 2020. The complainant maintains he informed the insurer’s builder about the theft about a week after the fire on 10 September 2018.
In any event, after being advised by the insurer’s loss adjuster to do so, on 15 May 2020 the complainant reported the theft to the police. He said the theft had occurred at some time between 10 and 24 September 2018. On 19 May 2020, the complainant provided the police with a completed stolen property list, with the value of the missing items totalling $44,655.
In early 2022, following the determination in 788318 being issued, the complainant sent the insurer a list of stolen contents items totalling $132,693.98.
The insurer assessed the loss from the theft (less the $250 excess) at $34,263.19 and offered to settle for that amount around 10 June 2022. The complainant rejected the offer. He says that as the loss exceeds the $100,000 contents sum insured, the insurer should pay him the sum insured.
Around 14 March 2023, the complainant submitted to the insurer additional information in support of the theft claim, being eight tax invoices and two statutory declarations. In providing those documents, IH informed the insurer that the complainant ‘has been able to obtain some remittance advices and statutory declarations relating to the contents’.
The eight invoices are the documents in issue in this complaint.
The ability of an insurer to deny a fraudulent claim is confirmed by section 56(1) of the ICA:
56(1) Where a claim under a contract of insurance…is made fraudulently, the insurer may not avoid the contract but may refuse payment of the claim.
The ICA does not define ‘fraudulently’. However, case law concerning section 56 establishes that a finding of fraud ‘involves a finding that a person has been untruthful and deliberately so, with the intent of obtaining financial gain’.
It is self-evident that alleging fraud is a serious matter and should not be made lightly. While the standard of proof remains on the balance of probabilities, given the seriousness of a fraud allegation, I must be comfortably satisfied that a finding of fraud is warranted.
Typically, an insurer is expected to produce evidence of motive, opportunity, character and credibility, supported by expert evidence where appropriate.
The insurer had the metadata of the eight invoices analysed. It has provided the outcome of the analysis showing that the invoices were created well after their purported issue dates:
Issuer | For | Amount | Issue date | Date created |
RE | Ceiling spotlights, intercom system | $4,015.00 | 06/05/2017 | 24/07/2022 at 4.29am |
RE | Security camera systems | $4,835.35 | 13/06/2017 | 24/07/2022 at 4.14am |
MD | tiles | $2,581.70 | 10/08/2017 | 25/11/2022 at 10.19am |
MB | blinds | $7,290.80 | 17/04/2018 | 25/11/2022 at 9.58am |
LD | furniture | $18,260.00 | 05/05/2018 | 25/11/2022 at 9.07.45am |
LD | furniture | $19,154.30 | 01/06/2018 | 25/11/2022 at 9.07.06am |
LD | furniture | $12,657.70 | 11/07/2018 | 25/11/2022 at 9.17am |
LD | furniture | $11,616.00 | 13/07/2018 | 25/11/2022 at 9.25am |
The insurer’s investigations have also established that the eight invoices were each created on an online tool to create invoices. It says the relevant website confirms that there is an account holder who uses the complainant’s email address. Further, that it is unlikely that four different suppliers would all use the same online tool to create their invoices.
The insurer notes that:
the eight invoices were all created after it informed the complainant it had assessed the theft loss at $34,263.19, well below his valuation at $132,693.98
after the creation date issue was raised with him, the complainant said he had ‘reached out to the operators to obtain duplicates’, despite IH originally saying the complainant had ‘been able to obtain some remittance advices’
the complainant has not provided an explanation for the anomalous creation dates
despite saying the invoice authors were willing to provide statutory declarations confirming the invoices were duplicates, no such declarations have been provided (the statutory declarations the complainant did provide were for items not the subject of the invoices)
it is not possible that the invoices are genuine duplicates of authentic invoices created by four separate suppliers, given that the documents were created from the same source on just two separate occasions:
> the RA invoices were created at 4.14am and 4.29am on 24 July 2022
> the other six invoices (from three separate suppliers) were created between 9.07am and 10.19am on 25 November 2022
its loss adjuster has identified multiple discrepancies with the invoices, including some lacking ABNs; one of the LD invoices being out of numerical sequence; overlaps with the fire contents claim; and there being no shop called LD at the listed address.
According to the insurer, ‘the nature of the false documents with their differing layouts, dates and fonts, are such that they demonstrate a deliberate attempt’ by the complainant to mislead it into believing they were genuine invoices.
The complainant says:
he does not deny obtaining duplicate copies of tax invoices in recent times
there is no dispute the items were in the home prior to and at the time of the fire
‘the authors of the tax invoices are all in a position to provide sworn statutory declarations attesting to the products/items and the amount…paid for them’
all proof of purchase documentation had been stolen or destroyed in the fire
LD ceased operations prior to the COVID-19 pandemic
when the insurer’s loss adjuster inspected the home with him in April 2020, there was no indication there would be an issue with respect to the existence of the stolen items.
He denies providing falsified and/or misleading evidence.
Based on the exchanged information, I am satisfied it is more likely than not that the complainant knowingly falsified documents with the intention of obtaining financial gain from the insurer. This is because:
the metadata establishes that the invoices were created more than four years after their purported issue dates
the metadata also establishes the invoices were created on only two occasions, within brief periods of time and using a single online tool
the relevant website confirms an account is registered under the complainant’s email address
the complainant only suggested the invoices were duplicates after the anomalous creation dates were raised with him
the complainant has not explained why he did not originally disclose the invoices were duplicates or why the invoices do not contain any notation they are duplicates and has not provided any information from the suppliers about the recreation of the invoices.
The information the insurer has provided shows the complainant had a financial motive to falsify the documents, being to secure a much higher theft claim settlement. He also had the opportunity to do so through the online invoice creation tool. The discrepancies and lack of cogent explanation for them raise legitimate concerns about his character and credibility
I am therefore satisfied that the theft claim has been made fraudulently.
Yes. The fraudulent part of the theft claim is not minimal or insignificant. A full denial is not harsh or unfair in the circumstances.
As previously noted, section 56(1) of the ICA enables an insurer to deny a fraudulently made claim. Whether the insurer is entitled to deny the claim in full (that is, both fraudulent and non-fraudulent aspects) is dependent on the factors referred to in section 56(2) and (3):
56(2) In any proceedings in relation to such a claim, the court may, if only a minimal or insignificant part of the claim is made fraudulently and nonpayment of the remainder of the claim would be harsh and unfair, order the insurer to pay, in relation to the claim, such amount (if any) as is just and equitable in the circumstances.
56(3) In exercising the power conferred by subsection (2), the court shall have regard to the need to deter fraudulent conduct in relation to insurance but may also have regard to any other relevant matter.
That there was loss is not determinative
The complainant’s submissions emphasise that he has sustained loss. There is no clear submission addressing section 56 of the ICA.
However, that there was some underlying loss which falls within the policy’s coverage is not determinative. The complainant knowingly provided falsified invoices to the insurer to derive a financial benefit. It is established by case law that even if an insured has a valid claim, the making of the claim fraudulently may entitle the insurer to refuse payment of the entire claim.
The eight invoices total $80,410.85. That is a large sum of money. It also represents more than double the value of the theft claim the insurer assessed, 80% of the contents sum insured, and 61% of the loss claimed by the complainant.
In the circumstances, it is clearly not the case that only a minimal or insignificant part of the claim has been made fraudulently. Further, I am not satisfied that nonpayment of the legitimate aspect of the theft claim would be harsh or unfair.
Given the matters outlined above and taking into account the need to deter fraudulent conduct in relation to insurance, I am satisfied that the insurer is entitled to deny the theft claim in full.
The outcome is fair because the insurer has established that a not insignificant part of the theft claim has been made fraudulently.
AFCA has determined this complaint based on what is fair in all the circumstances, having regard to:
the legal principles
applicable industry codes or guidance
good industry practice
previous decisions of AFCA or its predecessor schemes (which are not binding).
The respective parties have completed a full exchange of the relevant information, and each party has had the opportunity to address any issues raised. I have reviewed and considered all the information the parties have provided.
While the parties have raised several issues in their submissions, I have restricted this determination to the issues that are relevant to the outcome.
AFCA is not a court of law. We do not have the power to take or test evidence on oath, or to require third parties to give evidence.
When we assess complaints, we consider:
available documents
the recollections of the parties
all relevant circumstances.
We give more weight to documents created at the time the events occurred. If there are no relevant documents, we will decide what most likely occurred based on the available information.
If there are conflicting recollections and these are evenly weighted, we may find that a claim cannot be established.
