About insurance fraud
Introduction
Insurance is what provides security for a persons life or property. Insurance fraud occurs when an insurance company, agent, consumer or adjuster commits an intentional deception so as to get an illegal gain. In most cases, an insurance fraud occurs during selling of what is insurance policy, buying of an insurance policy, using and underwriting an insurance policy. Insurance fraud occurs when; the insured person gives false information during policy application, the insured makes a false claim of damage of property, the insurer inflates the premium payments or when the insured intentionally plans for destruction of the insured property.
Types of seller insurance fraud
Ghost companies: in this case, what is insurance policy is issued and the monthly premiums are accepted from the insured but the said company is illegal and does not exist. In most cases, the ghost company owners dial the insured to sell them cheap and false policies.
Churning: This occurs when an insurance representative advises the insured person to open or renew their policies so that he/she can benefit. In most cases, the insured ends up losing. This fraud is triggered by the representatives desire to earn more commission.
Premium theft: This happens when the insurance representative accepts premiums from the insured person and fails to submit the premium to the company underwriting the insurance policy. This kind of insurance fraud has reduced as most of the insurance companies have embraced the direct deposits model.
Over and under coverage: This occurs when an insurance representative convinces a person to buy an insurance policy they do not require or sells a lesser policy to the insured and presents it as a complete policy. This occurs when the representative is trying to maximize commissions.
Types of buyer fraud
- False medical history: This is one of the most common type of buyer insurance fraud. This happens when the insured omits details like smoking habits and other preexisting conditions so that they can get a cheap insurance policy.
- Faking death or disability: Some people will fake death or disability so that they can get paid. Most people have been discovered through investigations by the insurance companies.
- Post dating life insurance: This occurs when what is insurance policy is arranged after the death of the insured person and it appears to have been acquired before the death of the person. It occurs with the help of an insurance representative but is easy to detect due to the company's record keeping.
- Murder for proceeds: This happens when a spouse or business partner murders the insured so that they can get the proceeds. This is usually triggered by financial difficulties.
- Lack of insurable interest: this happens when a person who should not be insured is inured with the hope that they will die soon.
- Suicidal accidents: This is when a person commits suicide in a manner that looks like an accident so that his family can be compensated. This fraud is very difficult to detect as the insurance companies rely on the medical report to determine the cause of death.
Tips and comments
The following tips will help you avoid insurance fraud.
- Be knowledgeable and always demand to understand how the insurance representative comes up with the premium amounts you are expected to pay.
- Try and find out more about and insurance company before committing yourself to work with them.
- Do some comparison on what the different insurance companies are charging for the policy you are interested in.
- Always make payments by check or money orders addressed to the insurance company.
