Insurance Fraud is when you fraudulently start a claim to obtain benefits or monetary gains. Unfortunately, this happens quite a bit and costs the insurance companies several billions of dollars a year. Insurance fraud has been around as long as insurance itself has been around. It will in doubt affect the lives of everyone. Although the person committing the fraud may not be aware that their actions are causing damages on everyone or not, it does create severe consequences for everyone. It can be direct or indirect. Direct would be actions such as accidental or injury to someone or damages to personal property. The indirect consequence would be making insurance premiums much higher for everyone. This causes a huge a problem. Law enforcement and government entities are making huge strides to deter these actions.
The reason most insurance fraud is committed is for monetary or financial gain. Now it’s hard to figure out the exact amount of money that is taken by fraud. The reason why is it hard to detect. It’s not like your normal crimes of theft or homicide. It is estimated that about 10% of the losses from insurance is because of fraud. The same thing with medical institutions, but it’s a little bit lower but still around 10%. Different studies of this information vary. From 3%-30%.
Fraud is also classified into two categories. Hard fraud or soft fraud. Hard fraud is someone purposely puts a plan into motion to cause loss. This can be occurred by for instance an auto accident or automobile theft or fire. They claim this so that it is covered by the insurance company and then they will receive some sort of payment for the damages. And if you get an elaborate crime circles and that can cause for the loss of millions. Soft fraud is when someone embellishes on the actual amount of damage or loss from an actual claim. Sometimes this also involves someone purchasing a new policy and using preexisting damages to be covered by the new policy. This is also used sometimes in the reverse, by not reporting preexisting issues with a vehicle so that they can receive a lower premium on their policy.
Fraud is severely punishable by law and in the United States it is a crime nationwide. And the majority of states have fraud agencies or bureaus. The specific type of agencies are where enforcement agencies can carefully pick through the fraud reports and hopefully lead to prosecution by careful detection.
There is more than just automobile and medical insurance fraud. There are several different types. Some of the categories include life insurance, medical insurance, staged accidents or collisions, and exaggerated or embellished claims.
Most companies just report the claim of fraud to their insurance agency, but there are many ways of having this investigated. They can also have it investigated by calling their local law enforcement companies and/or a private investigator. A private investigator can actually investigate the person to see what their day to day activities are to see if they are actually injured or have the losses they that have claimed to have received.