Insurers are preparing for a rise in fraudulent claims as both businesses and individuals come under pressure from the tougher economic conditions.
GDP data due to be released on Thursday is expected to confirm New Zealand has gone into a recession, driven by the first nationwide Covid-19 lockdown.
But there are fears that times could get tougher from here, with the Government's wage subsidy drying up and financial pressure mounting on some businesses.
Richard Shehean, head of corporate at insurance broker Marsh New Zealand, said insurers would be expecting to see more fraudulent claims, including commercial property insurance claims driven by arson.
"When you have run out of money in your business and haven't got anywhere else to go and you need some money and you've got an insurance policy ... historically you would expect to see more fires to try and claim the insurance money back."
Yvonne Wynyard, insurance fraud bureau manager at general insurance industry body the Insurance Council of New Zealand, said during recessionary times and economic hardship everybody expected more fraud.
"It was the same with the GFC as well, and it doesn't hit just insurers, it hits just about everybody."
She said that included government agencies like ACC and the Ministry for Social Development.
"Everybody is expecting more fraud as we go into harder economic times but it won't be related to just arson. I suspect we are going to see more business asset-type claims - people going under in business and they want to be able to get quick cash quickly."
Wynyard was working at ACC during the period after the Global Financial Crisis in 2008.
"From working within government I can tell you we were seeing all of a sudden people claiming. When you look into the motivations it was because they were losing their business or going under."
Wynyard said it was hard to collect hard data on how much fraud was going on after the GFC and it often took a while to identify and investigate.
"Fraud is very intangible until it is found. You don't know what you don't know, until you find it."
She said insurers had specialist investigators who were constantly on the lookout for fraud.
All insurance claims are also loaded into a database, which helps to identify fraud cases where some policyholders have insurance with two providers and double dip by making two claims.
Earlier this year the ICNZ also started an industry working group to allow fraud trends to be picked up earlier.
Wynyard said it was starting to see some early signs of possible fraud, with a rise in food spoilage claims and water-damage claims.
"Water damage seems to be on the rise as well - not just from floods and storms but from household leaks, broken pipes and taps being left on."
Wynyard said there could also be more fraudulent claims around portable devices like laptops and iPhones.
"I think we might see some pick up with people working from home now. There might be more in that space.
"I think with the Government subsidy ending and those that were surviving with their electronics at home, that is just an easy way, spill coffee on a laptop ...
"It is usually high-value items with low disruption to their life or lifestyle."
But there are tough consequences for those who get found to be making a fraudulent claim.
"The worst-case scenario is they could be prosecuted."
Most likely the policy will be voided, which makes it very difficult to get insurance with anybody else in the sector.
Wynyard said it was hard to say when the sector might see a rise in fraudulent claims coming through.
"I understand we are starting to enter the recession now so the harder it gets for people - we could start seeing it now or might be a few months before people are really desperate."
Martin Hunter, chief risk officer at IAG, the parent company for State Insurance and AMI, and New Zealand's largest general insurer said it continually monitored the risk of fraud and was well aware of the heightened risk environment posed by the pressures created by Covid-19.
"We have significant anti-fraud capability and continue to invest and increase that capability.
"A range of anti-fraud measures are in place to prevent, detect and investigate fraudulent attempts and activity."
Hunter said aside from potential criminal penalties, people needed to be aware that a fraudulent component of a claim could put an otherwise valid claim at risk of being declined and could also result in problems for them maintaining or obtaining insurance cover in the future.
"This could also impact on their ability to borrow to purchase assets.
"Insurance fraud is a cost to all customers and places upwards pressure on insurance premiums."
He said if a member of the public suspects someone has committed insurance fraud or is going to make an attempt, they should report the fraud via the Insurance Fraud Bureau website, where reports can be made anonymously.