The General Insurance Association of Singapore (GIA) is calling for a new law against fraud.
It submitted a 30-page paper to the Monetary Authority of Singapore last month to recommend new rules that provide clearer definitions of insurance fraud, to deter people from filing fraudulent claims.
GIA technical director Jimmy Tan noted that insurance fraud cases are currently considered as cheating under the Penal Code.
Exaggerated or inflated claims make up most of such cases, he added.
A motor workshop may submit a claim of $10,000 for a damaged car bumper on behalf of its client, for example, when the actual cost of repairs is only $2,000, he said.
Under the new law proposed by the GIA, the workshop would have to be able to justify the $10,000 price tag for repairs.
The new law would target parties that collude or assist in making fraudulent claims, he added.
"It may not secure more convictions, but when these laws are in place, experience shows that it is a strong deterrent in such cases," he said. "At present we do not have this, so people can put whatever they like in the claims. There is no risk for them."
The GIA said countries such as the United States and China have insurance fraud laws in place.
GIA executive director Derek Teo expects the process of getting an insurance fraud law approved to be "a long haul", but hopes for changes in the long term.
When contacted, the MAS said it has received and is reviewing the GIA proposal.