Insurance Fraud is not only a crime; it can have disastrous consequences for all parties involved. To protect yourself from insurance fraud, you need to be aware and alert. We consulted the experts, and here are their top tips on how you can avoid insurance fraud.
Since actual insurance fraud is a crime that requires intent, it’s fairly simple to avoid - don’t intentionally lie or falsify any statements or documentation, period. However, related infractions- like material misrepresentation, can occur from irresponsible documentation submission or incorrect application responses, especially when material information is omitted.
Be sure to carefully review and fully research responses to applications for insurance and post-claim questionnaires. Leaving out critical information could result in the policy being voided or the claim being properly denied.
Stacey A. Giulianti, Esq. Chief Legal Officer Chief of Special Investigations FPIC
To be tough on fraud, you must first be able to detect it. This necessitates carefully considered underwriting and claims management methods. It begins with recognizing, comprehending, and assessing the company's primary internal and external vulnerabilities. Once a thorough awareness of potential soft spots is achieved, a continual flagging system can be built, updated, and examined for optimization opportunities.
Two major impediments prevent the development of these efficient processes. To begin, there is a lack of communication; everyone from the top and mid-level management to claims handlers, the finance department, and sales people must be committed to making fraud a priority. Even the simplest vulnerability assessment and alerting systems will fail without this buy-in and cross-functional collaboration.
Second, there is simply too much data in underwriting and claims scenarios to process manually and make timely, informed, and intelligent choices without the use of IT.
Daniel Carter, Marketing Manager of Loanx
Poor procedures won't improve by buying the latest IT solution and calling it digitalization. So, first, establish clear processes with cross-functional responsibilities, then leverage today's technology to help make claim-by-claim decisions. This decision support system can aggregate data on individual policyholders, for example.
Imagine trying to manually handle this information, keeping due diligence track records up to date for each policy holder in real-time. Impossible! Insurance firms must crack down on fraud to deter such scams. To do so, efficient and effective processes must be in place, supported by current technology.
Faster claims processing, happier consumers, and fewer fraudsters are all benefits of having a system in place that can assess if a claim may be fast-tracked, run normally, or require an inquiry.
Gerrid Smith, Chief Marketing Officer at Joy Organics
Every day, car accidents get reported. Criminals can orchestrate fake accidents then go ahead to make claims. Two people can stage an accident then visit a complicit medical facility to get treatment. They will obtain falsified billings and attach them to their fake identities, which they will later submit to the insurance company.
Concurrently, they will organize with an auto parts shop and register false damages for which they will make claims. The insurance company, therefore, pays for the medical expenses and car damages. The criminals can even make more claims with workers' compensation programs, which the same insurance company pays.
The problem here is that all these procedures are handled by different business lines in the insurance company, making them difficult to detect. Companies can install appropriate software to detect such frauds. Data-driven investigations can identify the links between the alerts made, making it difficult for fraudsters to exploit departmental disconnects in insurance companies.
Harriet Chan, The Co-Founder And Marketing Director At CocoFinder.
One recommendation I have for avoiding insurance fraud is to conduct background checks on the agent. Before signing any documents, learn about an agent through the Internet. One resource to consult is the Department of Insurance website for the state in which the agent conducts business. Often, this will assist in swiftly identifying any previous issues. Ascertain that the agent maintains a current license with no reported sanctions, especially for an extended period of time.
Hutch Ashoo, Founder & CEO Pillar Wealth Management, LLC.
Be wary of websites and emails that may attempt to steal your personal information. You will not be solicited by an insurance company unless you contact them directly and request a quotation or other information.
Tip: Use caution while clicking on email links. Check to see who sent the email and what the link is for. Some links include malware, which allows the sender to steal your information if you click on them.
Shiv Gupta, CEO of Incrementors Digital Marketing
To avoid insurance fraud, you must research and be aware of what you buy and where you buy your insurance. One of the best ways to prevent fraud is to obtain a policy from registered insurance companies. By doing so, you reduce the risk of an encounter with an authorized person. You can also easily inquire about an insurance company if you have doubts about the selling representative.
Another thing to remember is to avoid signing blank cheques or forms, for this can lead to a scam where the selling representative will possibly misuse your signed form. You can also consider paying directly to the company itself.
Lastly, double-check offers that seem suspicious and are too good to be true. Some fraudsters offer a lot of discounts or sell policies that are way below the average schemes offered by other providers.
Matthew Roberts, Chief Operating Officer at My Choice
The best way for both insurance providers and their customers to avoid insurance fraud is to simply be honest and abide by the agreements put in place at the inception of the relationship. If you are a customer, never lie about a claim that never happened. For example, many people try to say that they live in a different state than they actually do because they will get cheaper rates in a less-crime-ridden city. Doing this stuff will only cost you money in the long run when the insurer finds out you were dishonest.
Insurance fraud costs an average American family up to $700 per year and costs the insurance industry billions of dollars. No matter how much dough you think you are retaining by making false accusations, it won’t equal the repercussions of lying.
The same applies to insurance companies. If an agent guarantees a certain amount of coverage and won’t follow through with it when the time comes, the customer can take legal action against the company and cost them large sums of money. Just tell the truth. It’s not that hard.
Shawn Laib is an Insurance Expert with AutoInsurance.org.
One of the best ways to prevent insurance fraud is to be aware of what is covered in your policy. Take time to read your policy and understand exactly what it covers. This will help you fight fraud when you are aware of what you are supposed to be receiving. It can also help if you make an honest mistake on a claim. If you are unsure of what is covered or not covered, contact your insurance provider.
It is equally important that you understand what is in your policy. You should know what kind of proof will be required if you have an accident or need to file a claim. If there are any limitations, exceptions, or loopholes, you need to know about them, so they do not cause problems for you later on down the road when trying to submit a claim. When reading through your policy, look at all the fine print and make sure that nothing has been overlooked by either the insurance company or yourself.
Austin Dowse, CEO Aimvein
Arthur started Assured Standard after seeing his sister struggle with finding insurance policies for her business. Thanks to his background in business administration, he knows exactly what small and big businesses need to keep operations running.