Professional Documents
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In order to combat insurance fraud it is first necessary to be able to define and identify it.
An illegal act on the part of either the buyer or seller of an insurance contract. Insurance fraud from the issuer (seller) includes selling policies from non-existent companies, failing to submit premiums and churning policies to create more commissions. Buyer fraud includes exaggerated claims, falsified medical history, post-dated policies, viatical fraud, faked death or kidnapping, murder and much more.
INSURANCE FRAUD
Are there any easy solutions to this problem? No, there are not. We, consumers, legislators, regulators, and insurers, must work together to create an environment that either prevents or detects insurance fraud easily when it happens.
HARD FRAUD Usually a deliberate attempt either to stage or invent an accident, injury, theft, arson, or other type of loss, that would be covered under an insurance policy.
SOFT FRAUD Sometimes called opportunity fraud, occurs when a policyholder or claimant exaggerates a legitimate claim.
Hard Fraud
Extremely complex schemes, often involving medical practitioners, lawyers and their patients or clients, are employed.
These schemes are one of the most costly forms of insurance fraud and are widespread. Millions of dollars may be lost to a single crime ring.
Hard Fraud
This is also committed by executives and employees within the insurance industry. Examples: An employee of an insurance company accepting bribes or kickbacks. An insurance agent who accepts premium payments, and fails to remit the funds to the insurance company.
Hard Fraud
Also included are phony insurance companies set up by con men. Premiums are collected from unsuspecting consumers and claims are rarely or never paid. When too many claims are filed the con artist disappears with the company assets.
Soft Fraud
One example is the inflation of an auto claim to cover the deductible or the rise in insurance premiums. This also occurs during the underwriting process when an applicant provides false information to lower insurance premiums or increase the likelihood of acceptance for insurance.
Soft Fraud-Examples
1. Underreporting the number of miles driven either to and from work or on an annual basis. 2. Giving a false location where the car is garaged. 3. Failing to report an accurate medical history when applying for health insurance.
Soft Fraud-Continued
4. Exaggeration of the amount and value of items stolen from a home or business. 5. Failing to report the correct number of employees for workers compensation insurance coverage. 6. Providing a false report of income or inventory to lower the insurance premium for a business.
Increased Fraud-Continued
Medical economics-large numbers of uninsured and/or underinsured patients. Insufficient penalties- insurance fraud is perceived as high reward/low risk crime Low law enforcement priority-top priority is given to reducing drugs and violence thus shifting manpower away from white collar crimes.
Mr. Ashish, a resident of Bandra, was injured in an accident when his two-wheeler hit by an auto-rickshaw. Investigation revealed that he was allegedly driving under the influence of alcohol and fell off his bike.
Father and son succeeded in receiving compensation of Rs. 3,55,000/- and Rs. 1,52,000/- for the alleged injury sustained while proceeding in a motorcycle, which was dashed by a car, actually they are operating their own tractor, which jilted into a ditch as result of which the occupants slipped down and sustained injuries .
Insurance Regulators
The NAIC has created model legislation for states to enact that makes it harder for con artists to set up insurance companies. In many states, regulators are increasing insurer oversight. There is interest in making white collar crime a federal crime. In 1994 the omnibus crime bill set penalties for anyone convicted of submitting false financial data to state insurance regulators.
Insurance Companies
Special Investigation Units-created within the companies to detect and investigate suspicious claims. National Insurance Crime Bureaucreated by insurance companies in 1992, dedicated to fighting insurance fraud. Creation of insurance fraud database networks accessible online.
States-continued
Require claims forms and insurance applications to carry insurance fraud warnings. Provide immunity to insurers, and others, reporting insurance fraud and sharing information. Require inspection of automobiles before granting insurance coverage.
No, it is not yet time to ease off our efforts. It does appear that our years of work is paying off. There has been, for the first time, virtually no actual increase in the amount of insurance fraud annually while, with population increase, there has been a lowering of the average cost to consumers for the first time.
Relax-Continued
A very lovely young woman appeared. She was dressed in a macram bikini. Needless to say, she received a lot of attention. The young woman went around the dealers trading $20 bills for change. Apparently, no one thought to ask why she needed so much change.
Relax-continued
Finally, someone realized all the $20 bills were identical. Now-they realized why she needed so much change. She was exchanging counterfeit $20 bills for $20 in good money. The macram bikini was a diversionary tactic on her part.
CONCLUSION
We must never let down our guard. The fight against insurance fraud is a permanent battle which will never be won in its entirety. One major part of the battle is public education. We must show the consumer that insurance fraud costs them and they must aid in the battle.
THE END
BUT ONLY THE BEGINNING IN THE FIGHT AGAINST INSURANCE FRAUD!