Insurance fraud as a criminal offense (escroquerie)

Article 313-1 of the French Criminal Code punishes escroquerie, fraud by deception, with five years' imprisonment and a €375,000 fine, and article 313-3 applies the same penalties to an attempt. For an insurer, the attempt counts as much as the completed offense: an inflated claim detected before payment can still be prosecuted. There must, however, be fraudulent maneuvers. The settled case law of the criminal chamber of the Cour de cassation holds that a mere lie, even in writing, is not enough; there has to be an external element that lends it credibility: a fake invoice, a false witness, a staged scene, a doctored document. A policyholder who, on his own, inflates the value of a theft in his claim is therefore not necessarily a fraudster in the criminal sense, whereas one who produces a fabricated purchase invoice is, and also commits forgery. The aggravating circumstance of acting as an organized gang, common in staged-accident rings, raises the penalty to ten years. The criminal route runs alongside the civil one, which remains the everyday weapon. At claim stage, the forfeiture clause deprives a policyholder acting in bad faith of any indemnity for the claim concerned, provided it was drafted in very conspicuous characters. At underwriting, article L. 113-8 of the Insurance Code voids the contract in the event of an intentional misrepresentation that changes the subject of the risk or reduces the insurer's assessment of it, with premiums paid remaining the insurer's; a non-intentional omission falls under article L. 113-9 and, once a claim has occurred, proportional reduction. For forfeiture and voidance alike, bad faith has to be proved, and the burden is on the insurer. Many companies make do with the civil sanction, which is quicker, and keep criminal complaints for organized cases or large amounts.