What Are the Most Common Insurance Fraud Claims?
People have a number of impulses, and one of them is the propensity to cheat to acquire advantages and illicit benefits. Companies increasingly find that they encounter human avarice and the desire to elevate status, even unjustly.
Insurance firms are constantly at risk of defrauding many types of clients. They could take the form of insurance company representatives, the policyholder, or even the insured paying regular premiums. A recent occurrence, however, suggests a more active approach to identifying such fraud. This approach has been demonstrated to be effective in reducing risks to businesses.
What is an Insurance Fraud Claim?
Any type of misrepresentation of incorrect information or claiming of incidents that are untrue to the insurance company to obtain specific benefits is called an insurance fraud claim. These advantages could include the insurance sum, compensation for injuries, and updated, branded goods like cars and vehicles to replace damaged or outdated ones. Frauds include starting a fire in a residence or pretending to be another insured person to benefit from that person’s insurance benefits.
According to the National Health Care Anti-Fraud Association (NHCAA), the most common insurance fraud claims include billing for services not rendered, upcoding or billing for a more expensive service than the one provided, and unbundling or billing for each component of a service as if it were separate. Proper medical coding services can help prevent such fraudulent practices and ensure accurate billing and reimbursement for healthcare providers.
Insurance Fraud Claims – ABI Reports
There are numerous ways to detect insurance claims, as well as various kinds of insurance fraud. Auto insurance fraud, though, consistently outperforms. The Association of British Insurers’ figures indicates a significant decline in insurer claims. However, since 2021, both the quantity and expense of these claims have consistently decreased.
At 89,000, the number of false claims discovered decreased by 5%, reaching its lowest level since 2007. At £1.1 billion, its combined revenue fell 2% to its lowest level since 2012.
Even while the frequency and dollar amount of fraudulent motor insurance claim claims decreased last year, they still remained the most frequent. Detections of fraud decreased by 7% to 49,000, but their value, at £577 million, only declined by 1%. 10,617 organized vehicle frauds have been discovered an increase of 8%.
This increase was partly caused by the Insurance Fraud Bureau’s efforts to counter cash-staged vehicle scams. The value of property insurance fraud increased to £124 million, up 9%, even though fraud numbers dropped to 18,000 from 24,000 in 2020. A surge in business fraud discoveries led to this. The 12,978 false liability insurance claims decreased by 10% in number, and their £378,000 worth decreased by 8%.
Some of the most unusual insurance reports are:
Cancer Con: A lady claimed she was diagnosed with cancer and had one year to live. The claim she made on her insurance would have been £130,000 if paid. However, doctors confirmed the absence of her disease records. Consequently, she was imprisoned for two years and six months under an electrically tagged curfew.
Pyramid Scheme: Another similar scam was reported in which a fictitious claim was made to be a passenger in a genuine vehicle collision. The claim was made to claim a personal injury for £4,000 to recover. However, she failed the investigators who found that she was in Egypt during the holidays receiving supposed treatment.
The Most Common Insurance fraud claims include:
1. Car theft
While stylish cars continue to rise, auto theft and automobile theft rank among the most common insurance fraud claims. Insurance fraud replaces old, branded vehicles with refurbished ones. It drives them for a while before abandoning them and claiming damage from the insurance provider to obtain a replacement.
Yet, the auto’s security system has been improved to prevent theft. Therefore, it can be challenging in these situations to identify the real culprit and justify the theft. Auto resale results in increased financial gain. To avoid theft accusations, they sell their cars to criminal organizations.
Also, these fraudsters often allow their close friends to steal their car and break it into pieces. They claim that it would be financially impossible to rebuild it. Instead, many people transfer their autos to foreign buyers without verifying the papers before alleging theft.
2. Minor car accidents
Another justification used by thieves to file insurance claims is staging their vehicles in minor collisions. They typically include one of two things: speeding up so the motorist in the back hits their car or intentionally colliding with another vehicle. Together with such a few mishaps, there are a few injuries.
Insurance companies frequently see “Whiplash Injuries,” for which people can file claims and receive compensation. A different type of claim known as “Phantom Passenger” is advantageous to many passengers who sustain the same injury in a car collision.
Therefore, insurance firms have implemented several precautionary steps in response to accidents reality to combat such scams. Instead, to receive insurance reimbursement for their recuperation, the injured must undergo a certain medical examination to determine the severity of the damage.
3. Staging Homes at Fire
Several fraud cases suggest that insured individuals stage their homes as on fire. Putting their priceless assets aside in order to secure them. This has proven to be yet another ploy to gain access to priceless assets that they may have claimed they were ready to replace. Unfortunately for the scammers of those times, insurance inspectors have discovered a number of efficient ways to determine whether the allegedly missing materials were actually present when the property burned down.
4. Commercial Liability for Fraud
Any one of these two categories of insurance claims, including commercial liability fraud. This refers to an employee filing an insurance claim for harm, accident, or death resulting from their employment. In contrast, public liability insurance protects people or the public in accidents. Yet, recent studies have focused on people who make up for accidental diseases to get coverage. Notwithstanding the truth and with some exaggerations that pretend to be genuine accidents.
5. Robbery, Burglary, and Theft
Many studies have drawn attention to people arranging robberies and burglaries to take home goods they had never previously acquired. Some of these criminals deliberately break into their homes, whether renters or owners, with their close friends. Additionally, they allowed them to cause a commotion by purposefully stealing their belongings. This was so they could submit fictitious insurance claims for specific priceless things.
Yet, insurance providers have tightened their controls to capture all insurance frauds. They spend substantial amounts on methods for discovering insurance frauds each year, ranging from £200 million. As a result, 130, 000 insurance fraud cases were found in 2014.
What Happens in the Case of Insurance Fraud?
Individuals making fabrications regarding insurance claims can have severe consequences for victims and perpetrators. For instance, individuals caught up submitting these fraudulent claims can receive longer jail time, fines, and other consequences depending upon the extent of the offense they have committed.
On the other hand, individuals found guilty face several consequences from the insurance companies they are insured with. This may result in the suspension of their insurance policies, revoking insurance benefits, heavy fines, and court-ordered restitution payments.