Insurance Fraud - Risks & Tactics

Insurance fraud is a billion-dollar problem that everyone pays for one way or the other over time.  Insurance companies have to pay extreme amounts of money to hire and maintain anti-fraud departments which can include investigators, attorneys, and specialized underwriters who are trained to spot fraudulent techniques.  The cost for maintaining this department is naturally passed on to all of the company’s legitimate customers as part of the cost of doing business, not to mention the damage done to society.  So what is insurance fraud and who are the people who do it?  The answers might be a bit surprising.

Auto Insurance Fraud

Auto insurance fraud runs the gamut from actually staging auto accidents with unwary strangers in order to get their insurance to pay for damages to arson - actually setting vehicles on fire in order to file a claim for damages.  Sometimes scam artists will wave you forward at a four-way stop and then run into you, later claiming that you did not stop at your sign and they never waved you forward.  Techniques for catching these types of insurance fraud can be difficult and usually involve spotting a pattern of abuse through the various insurance companies and claims tracking services.

Renters/Homeowners Insurance Fraud

One of the most common types of fraud for homeowners and renters is to set fires to try to damage or destroy property.  Not only is this incredibly dangerous, but it is also fairly easy to detect.  All fires that happen in a home and result in a claim are investigated at some level - some of them quite thoroughly if there are suspicious signs.  One of the tactics used by arsonists is in using a combustible fluid such as gasoline to help start or spread the fire.  This leaves traces that are easily detectible to the trained investigators.  Hundreds of people are prosecuted for this crime on a yearly basis and the penalties are quite stiff, usually resulting in jail time and financial penalties as well.

Life Insurance Fraud

Life Insurance fraud doesn’t usually happen from the customer to the company as pretending to be dead in order to file a claim is extremely difficult if not impossible to pull off and profit from.  Most insurance fraud in this category comes either from the fraudulent sale of  insurance or worse; homicide in order to collect on someone else’s policy.  Fraudulent life insurance policies simply do not perform as promised when they were sold.  There are companies that will sell a policy guaranteeing a certain benefit payable upon death but when that time comes, the policy holders always delay, launch endless investigations, find loopholes in their extensive contract that allows them to not pay, or outright refuse payment at all.

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