Continental European Legislative and Judicial Trends: Statistical Improbability Not Sufficient to Rebut Claim for Car Theft Under Motor Policy in Sweden
It is a well known fact that fraudulent insurance claims create very serious and costly problems for European insurance companies, including those in Sweden. Perhaps efforts by insurers to fight fraudulent claims occasionally have gone too far. Obviously the Courts agreed in a recent judgment handed down by the Svea Court of Appeal (Sw. Svea hovrätt), in which it was held that statistical improbability of a car theft was not, per se, sufficient to rebut a claim under a motor policy.
The owner of a private car of 2004 model notified the police and his insurance company that his car had been stolen in October of 2004. The car was equipped with an electronic antitheft device called an immobilizer. The owner retained the two original car keys in his possession after the theft. The car was never found.
The car was insured under a motor policy that included protection against theft.
It was understood that the value of the car was SEK175000.
According to the owner and an accompanying friend, the car was parked at around 8:30 pm at a parking space close to a commuter station and close to European highway 6 (E 6). There were no other cars at the parking space. When they returned at around 10:00 pm, they discovered that the car was gone.
The insurer disputed the car owner’s entitlement to insurance indemnity on the ground that the car had not been stolen that night and that, accordingly, no loss had occurred that fell within the scope of the insurance policy.
Studies performed by Larmtjänst AB (a nationwide alarm and rescue enterprise) show that 90 percent to 92 percent of all vehicles that are stolen in Sweden are found within 10 days. The remaining 8 percent to 10 percent are vehicles that are stolen through organized theft operations that may include export to other countries (normally very expensive and exclusive cars) or involve cases of insurance fraud. The car stolen in this case was neither very expensive nor very exclusive.
According to available statistics from Larmtjänst AB only two cars of the same
make and model, the Volvo V 70, equipped with the same kind of immobilizer,
were stolen and never recovered in the region during 2007.
An extensive theft protection project carried out by Larmtjänst AB in 2004 investigated
the percent of stolen cars with modern theft protection devices that had been stolen with a key or by manipulation of the theft protection devices, respectively. The results showed that almost 100 percent of the cars that were found had been accessed with the cars’original keys.
The car was locked, and its alarm was activated. No car keys were missing after the alleged theft. The immobilizer prevents the car from being started without access to its own keys.
Some kind of transport of the car away from the parking place was improbable, because this requires planning and was not possible due to the fact that the car was never frequently parked in this area. Further, towing, hoisting or transport of the car would entail a significant risk of detection.
Under Swedish law insurers can defend a claim by putting the claimant (the insured) to proof of loss and then challenge that proof rather than allege fraud, which normally is very difficult, if not impossible, to prove. Accordingly, when an insurance company disputes an insured’s entitlement to insurance indemnity, the insured has the onus of proving the circumstances of the loss to establish that the loss falls within the scope of the insurance policy.
The level of proof required is satisfied if, on an overall assessment of all circumstances,
it is more probable than not that the loss falls within the scope of the insurance policy.
It was established by the examination of the owner and his friend that the car was parked at the parking place at the relevant time and that the car was no longer there when they returned.
It was understood that the car was equipped with a so-called immobilizer and that all car keys were left in the owners’ possession. Therefore, a theft had been possible either by an exchange on site of the components of the immobilizer or by the car being towed away from the site.
The Courts agreed with the insurance company that it was not probable that the
components were exchanged. Such operation takes a lot of time, advanced technique
and in depth knowledge as to how the system operates.
The Courts disagreed with the insurance company on the possibility of the car being towed. Considering the fact that the parking place is located close to E6, further planning did not seem necessary to steal the car using a truck to hoist and transport the car. For persons with access to that kind of vehicle, it would be possible to search for suitable objects to steal without planning exactly which car to steal and where. The Courts did not share the view that it is improbable. On the contrary, the Courts found it not improbable that someone had been “cruising” with a break-down truck and chose to steal the car. In addition, the Courts
took the view that the risk of detection is low if a car is towed away from a parking space devoid of people. And towing away a car would not be an indication of an ongoing theft.
It is emphasized by the Courts that the statistics presented by the insurance company
mean that the mere fact that a car is equipped with an immobilizer and is not found shows that it is more probable that an insurance fraud has been committed than the car has been stolen. However, lacking a clear exclusion to that effect in the policy conditions, a claim cannot be denied solely by reference to the statistics and these two circumstances.
Hence, the car owner was considered to have proven that it was more probable
than not that the car had been stolen, and he was awarded the claimed amount.
Click here to have the rest of this series — and other GC Capital Ideas updates — delivered to your inbox.
Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., a US registered broker-dealer and member FINRA/SIPC. Main Office: 1166 Avenue of the Americas, New York, NY 10036. Phone: (212) 345-5000. Securities or investments, as applicable, are offered in the European Union by GC Securities, a division of MMC Securities (Europe) Ltd., which is authorized and regulated by the Financial Services Authority. Reinsurance products are placed through qualified affiliates of Guy Carpenter & Company, LLC. MMC Securities Corp., MMC Securities (Europe) Ltd. and Guy Carpenter & Company, LLC are affiliates owned by Marsh & McLennan Companies. This communication is not intended as an offer to sell or a solicitation of any offer to buy any security, financial instrument, reinsurance or insurance product.
Guy Carpenter & Company, LLC provides this report for general information only. The information contained herein is based on sources we believe reliable, but we do not guarantee its accuracy, and it should be understood to be general insurance/reinsurance information only. Guy Carpenter & Company, LLC makes no representations or warranties, express or implied. The information is not intended to be taken as advice with respect to any individual situation and cannot be relied upon as such.
Readers are cautioned not to place undue reliance on any historical, current or forward-looking statements. Guy Carpenter & Company, LLC undertakes no obligation to update or revise publicly any historical, current or forward-looking statements, whether as a result of new information, research, future events or otherwise.
Statements concerning, tax, accounting, legal or regulatory matters should be understood to be general observations based solely on our experience as reinsurance brokers and risk consultants, and may not be relied upon as tax, accounting, legal or regulatory advice which we are not authorized to provide. All such matters should be reviewed with your own qualified advisors in these areas.