Insurance fraud is when deception is involved in the underwriting process. It could be a case where 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 fraud committed globally is increasing.
The motive for insurance fraud is greed. People are always looking to monetize insurance fraud. There are cases where people overinsure their property. They then intentionally destroy it to claim insurance.
Types of insurance fraud:
Life insurance:
Individuals take out policies to insure their lives. When there is a reasonable amount owed, they fake death and their beneficiaries claim the amount. They can 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 to take advantage of its benefits. Insured persons commit this type of fraud in various ways. Some common ways are:
• Allow the use of your policy information by someone else.
• There are cases in which people claim the amount incurred for the payment of prescriptions that are not prescribed by their doctor.
Medical providers also commit this type of fraud. They may bill for services that have not provided supplies that they may not have used or even alter existing claims.
This type of fraud is also committed by health insurance companies. They can remove the claims from your records, they may not pay the claimants or even deny coverage for the genuine parts.
Car insurance:
To claim insurance, people organize 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. Sometimes people claim coverage for an accident that may have occurred before taking out the policy.
Property insurance:
In this case, people damage their property to make a claim. Sometimes they destroy property that is not very valuable and demand a larger amount. People even fake the theft to make a claim. Sometimes people claim second insurance after they have been covered for their losses by an insurance company.
Insurance fraud affects society as a whole. Fraudulent claims cause insurance companies to incur large losses. To make up for these losses, these companies increase the premiums of honest policyholders. Therefore, honest citizens pay a price through no fault of their own.