Insurance Fraud in Poland

Insurance fraud involves intentionally deceiving an insurance company in order to obtain compensation or benefits to which one is not entitled. This type of fraud may be committed by policyholders, claimants, third parties, or even employees of insurance companies. Actions constituting fraud can include staging accidents, inflating claims, submitting false documents, or misrepresenting facts related to insured events. Polish law criminalizes these acts as they cause financial losses to insurance entities and undermine the integrity of the insurance market.

Typical examples include:

• Staged or fabricated accidents: Organizing fake vehicle collisions or accidents to claim insurance payouts.
• False claims: Reporting non-existent thefts, damages, or accidents.
• Overstating damages: Exaggerating repair costs or lost property values through fraudulent documentation.
• Policy manipulation: Backdating or falsifying insurance policies to cover known risks or losses.
• Multiple claims for the same loss: Filing the same claim with different insurers or across multiple policies.
• Company-related fraud: Creation or takeover of companies solely for filing fraudulent insurance claims, such as fake vehicle ownership to exploit coverage.

Insurance fraud is a major challenge for the Polish insurance industry, with estimates suggesting that between 30% and 40% of insurance claims, especially in motor insurance sectors like autocasco (AC) and third-party liability (OC), may contain fraudulent elements. This results in substantial financial losses to insurers, which ultimately affect premiums paid by honest policyholders. The growing sophistication of fraud schemes necessitates advanced detection and prevention mechanisms.

Insurance fraud is addressed under several legal statutes, notably:

• Article 286 §§ 1 and 3 of the Polish Criminal Code, which penalizes causing financial harm to another through deception or exploitation of a critical error.
• Article 298 of the Polish Criminal Code, specifically targeting fraudulent acts related to insurance claims and payments.
• Additionally, laws governing the insurance sector and financial regulations may impose administrative sanctions or other measures against fraudulent conduct.

Those convicted of insurance fraud may face:

• Imprisonment, which depends on the scale and complexity of the fraud. Sentences can range from fines to several years of imprisonment for serious offenses.
• Restitution orders requiring the repayment of any benefits fraudulently obtained.
• Confiscation of assets linked to fraudulent activities.
• Damage to personal and professional reputation, impacting future employment or business prospects.
• Additional civil claims by insurers seeking compensation beyond criminal penalties.

Prevention and detection involve:

• Advanced data analytics and fraud detection algorithms to identify suspicious claims patterns.
• Internal audits and investigations to scrutinize claims and policyholder information.
• Collaborative networks involving insurers, law enforcement, and judicial bodies for sharing intelligence and best practices.
• Encouraging whistleblower programs within companies to report irregularities confidentially.
• Training employees in red flag recognition and adherence to compliance protocols.

Criminal compliance serves as a foundational preventive tool by:

• Establishing clear policies and procedures to minimize fraud risks.
• Educating employees and management on legal responsibilities and ethical standards.
• Implementing internal control mechanisms for timely detection and response.
• Facilitating cooperation with law enforcement and regulatory agencies.
• Positioning organizations to mitigate liabilities and reputational harm when fraudulent activities are detected

• Immediately report suspected fraudulent activity to relevant law enforcement agencies for investigation.
• Engage legal counsel experienced in insurance fraud and criminal law to guide action.
• Collect and safeguard all evidence and documentation supporting the suspicion.
• Cooperate with authorities during inquiries and provide detailed information as required.
• Pursue civil remedies for compensation alongside or after criminal proceedings.

Legal services are often sought by:

• Insurance companies requiring defense or enforcement counsel.
• Individuals or businesses accused of committing insurance fraud needing representation.
• Policyholders seeking guidance to avoid inadvertent violations or to contest fraud allegations.
• Whistleblowers and internal investigators requiring legal protections or advice.
• Entities harmed by fraud pursuing claims and restitution.

• Early involvement of legal professionals ensures proper navigation through complex regulatory and criminal proceedings.
• Timely advice helps protect clients’ rights, prepare effective defenses, or structure investigations.
• Legal guidance facilitates compliance with procedural requirements, minimizing risk of procedural errors that could adversely affect the outcome.
• Early collaboration with authorities can demonstrate transparency and may influence more favorable settlements or penalties.
• It aids in managing reputational risks and coordinating communications to mitigate negative public exposure.