Scams & Frauds in Insurance An Overview Uncovering and reviewing the various frauds that take place in the insurance sector and ways to identify them.
Understanding Insurance Fraud Insurance fraud is an illegal act to exploit any insurance contract by either the buyer or the seller of the contract. Insurance is meant to protect against risks, and not to serve as a vehicle to the insured. Although any insurance fraud or spam by the policy issuer does occur frequently, the majority of cases have to do with the policyholder attempting to receive more money by exaggerating a claim. How can insurance fraud occur on the hands of both buyer and a seller? For example, a seller may sell policies from non-existent or spam/fraudulent companies that customers might not be able to review, or maybe fail to submit the premiums, and even churn policies to earn more commissions. Similarly, a buyer may falsify a medical history, exaggerate claims, use post-dated policies, fake death or kidnap, and even murder.
Insurance fraud can be further classified as follows: Insurance Fraud
Soft Fraud
Hard Fraud
Hard Fraud VS Soft Fraud Hard fraud mainly occurs when a person deliberately plans or invents a loss.
Soft fraud is sometimes referred to as an opportunistic fraud.
Hard frauds are comparatively less common than soft frauds as these involve thefts of millions of dollars sometimes.
The number of scammers and spammers have made soft fraud one of the most common frauds in the insurance industry.
Examples include a collision, auto theft, or maybe fire that is covered by the company’s insurance policy.
This type of fraud mainly consists of the policyholders exaggerating otherwise legitimate claims.
TYPES OF INSURANCE FRAUDS
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HEALTHCARE INSURANCE FRAUD
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LIFE INSURANCE FRAUD
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AUTOMOBILE INSURANCE FRAUD
Additional insurance scams With the advent of technology and latest tools, scammers and fraudsters across the globe have also gotten a chance to expand the horizons of the types of frauds that can be done. Insurance fraud, apart from automobile, healthcare, and life, is also widely done across other domains such as property insurance, premium fraud, unemployment insurance, and a lot more. The best way to be on a safer side from the existing frauds is to only speak with the authentic insurance companies as a buyer and to beware of any loopholes in the system as a seller. The companies should review the system constantly to avoid any possible fraud from taking place. Staying put from the spam calls or emails that might turn out to be a phishing scam or an attack, etc should also be taken care of.
Detecting Insurance Frauds ●
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The first step to detecting insurance scams is to identify suspicious or spam claims that have a possibility of being fraudulent. This can be done by insurance agents themselves or even by computerized statistical analysis. The public can also provide tips to insurance companies and other organizations, or even the law enforcement regarding any suspected insurance fraud carried out by other individuals. This can also include informing the company about fake/spam emails received in the name of some reputable insurance firm and sharing reviews on social media platforms to raise awareness. Suspicious claims can also be identified by comparing data about the claim to expected values by using the latest statistical tools.
THANK YOU Prepared by: Vinayak Joshi Manager, Money 2.0 Conference https://www.money2conf.com/