Insurance fraud is when deception is involved in the insurance process. It could be a case when someone makes a false claim from an insurance company. It could also be when the insurer refuses to pay the claimant. Statistics have shown that the number of insurance frauds committed globally is increasing.
The motive behind insurance fraud is greed. People are always looking to make a financial gain through insurance fraud. There are cases where people over-insure their property. They then intentionally destroy it to claim the insurance.
Types of insurance fraud:
Life insurance:
People take out policies to insure their lives. When there is a reasonable amount owed, they fake death and their beneficiaries claim the amount. They may appear after a few years and claim to suffer from memory loss.
Health insurance:
This is when the claimant provides false information to the insurance company in order to take benefits from them. Policyholders commit this type of fraud in several ways. Some common forms are:
• Allow someone else to use your policy information.
• There are cases in which people claim the amount incurred to pay for prescriptions that are not prescribed by their doctor.
Medical providers also commit this type of fraud. They can bill for services they haven’t provided, supplies they may not have used, or even alter existing claims.
This type of fraud is also committed by health insurance companies. They may remove claims from their records, may not pay claimants, or even deny coverage to genuine parties.
Auto Insurance:
To claim insurance, people fake accidents and collisions. It is also claimed when people report car thefts. You could also claim for damage that existed before the policy was taken out. Sometimes people claim coverage for an accident that may have occurred before they purchased the policy.
Property insurance:
In this case, people damage their property to make a claim. Sometimes they destroy goods that are not very valuable and claim a higher amount. People even fake theft to make a claim. Sometimes people claim second insurance after being covered for their losses by an insurance company.
Insurance fraud affects society as a whole. Fraudulent claims cause insurance companies to incur huge losses. To compensate for these losses, these companies raise the premiums of honest policyholders. Therefore, honest citizens pay a price through no fault of their own.
