Often, claimant make insurance claims which never happened just to get compensated by their company. But what they failed to realize is that every single false claim you make falls back to disrupt the insurance policy, and everyone will pay the price.
Before we dive deep into knowing the various major insurance fraud, let’s first look at what insurance fraud is.
What’s Insurance Fraud?
Insurance fraud is any act made by a claimant in an attempt to get fraudulent outcome from an insurance company. They often do this in order to obtain some benefit or advantage they are not qualified for. Insurance claims filed with the intention to defraud an insurance company or agency is considered as a false insurance claim.
Insurance fraud is as old as the insurance industry, beginning from the time they became a commercial entity. Greed, which is the pressing attempt to take undue financial advantage of another is the core motive of many insurance fraud recorded in history.
Types of Insurance Fraud
Insurance fraud can come in different forms and in different environment. We shall be looking at some of them in the course of this blog post
Faking Death to Claim Insurance Benefits
It shouldn’t shock you that they are still people that fake death so that their family can enjoy their life insurance benefits. This one is called, life insurance fraud. In 1974, a former British Government minister, John Stonehouse went missing at a beach in Miami. All attempts to find him was abortive. But many years later, he was found living in Australia with a fake name. On discovery of this, he was repatriated back to Britain and made to serve 7 years of jail term for forgery, theft and insurance fraud.
Fraudulent Injury Claims
This kind of fraud occurs in situation where there’s a minor (or no) injury sustained in the course of an accident but the claimant goes ahead to forge bills just for the purpose of getting his insurance company to pay for something that never happened.
There are also cases where it’s true that the accident happened but while reporting, he or she decides to exaggerate it. In that case, even though it was just minor bruises here and there, they will go on to include break of neck, leg, or arrange with the medical practitioner to take a bed in the hospital.
Fraudulent Theft Reports
Taking advantage of the provision of an insurance policy to get more than what you had before you lost is also considered to be fraudulent. This is because if allowed, it will trigger people to start initiating situations that will lead to a loss just to have a superior version of their property back through insurance claims.
Here’s a typical example. Let’s assume your home was robbed and your TV and Inverter looted, it’s fraudulent to claim that your TV, Inverter, Washing machine and iPhone was stolen at the same time.
In situations where the claim is real, inflated claims for theft is always considered a minor fraud.
Claiming for Damages that Never Happened
This one occur often among drivers. In Ontario, Canada, it’s the number one reason why cost of insurance is very high there.
This is a situation where a claimant tells a lie to claim damages of something that never happened. It can be framed in the form of a staged accident. There’s also a situation where the claim is legitimate but the fault came as a result of the carelessness of the owner.
How to Recognize and Fight Insurance Fraud
If you truly want your insurance company to last long, you must know every single form and faction of insurance fraud to enable your team spot it miles away. If you don’t protect your business, you will lose every single success you’ve ever recorded.
One more way to stamp out insurance fraud is to avoid signing a blank accident form. In the event of any vehicle collision, the insurance company and police must be contacted immediately to verify the level of damages done and to ascertain it was a legitimate claim.
What other form of insurance fraud have you noticed that we probably did mention here? Let’s know in the comments below.