While the digital age has made many aspects of day to day life much easier and more efficient it has also allowed for scams to become more sophisticated and harder to spot. One of the most common types of scams currently being carried out is insurance fraud scams. Here we will look at exactly what Insurance fraud is, the most common types, and how one can protect themselves.
What Is Insurance Fraud?
Insurance Fraud is any act committed for the purpose of defrauding an insurance provider. The goal is to extract financial gain from the insurer. These acts usually come in the form of inflated or made-up claims, usually to do with damages or personal injury. Damage insurance, usually to a residence, is also very common in Insurance Fraud.
Insurance Fraud does not only affect the insurance provider, it affects every day, honest, individuals. When an insurance company is required to make large payouts as the result of false or exaggerated claims it causes everyone else’s premiums to increase.
Types Of Insurance Fraud
There is an almost endless number of ways in which people have committed insurance fraud. Luckily there are a few which are by and large the most common methods of insurance fraud.
Phishing Scams: In general terms, a phishing scam is one in which an individual solicits personal or sensitive information from an individual by posing as a trustworthy organization. Phishing scams are often performed under the guise of one’s insurance company calling or emailing an individual and asking them to confirm personal information. This information is either sold or used for nefarious purposes.
Unlicensed Insurers and Unauthorized Policies: Many companies are not licensed to sell insurance yet still mislead individuals into believing that they are. The policies they sell are either unauthorized or outright fraudulent. One should always take care to purchase insurance policies from credible, licensed, insurance agencies.
Premium Embezzlement: It is possible that an insurance agent collects client premium payments but does not pass them onto the insurance provider. The consumer believes they are making the payments and that their insurance policy will be valid if/when they need to use it. “On the other side of the aisle, the insurance provider believes that the customer is simply not making their payments. This type of fraud can happen even with credible insurance companies. It is important to always request a receipt of one’s insurance payments,” says Dominic Alvares, a legal writer at Paperfellows and Assignment Help. Failure on the part of the agent to deliver proof of payment should be a red flag. In the event of this the insurance provider, not the seller, should be contacted immediately.
Medicare Fraud: There is a common scam being perpetrated in which an individual will represent themselves as a Medicare employee, claiming that a new “Obamacare” ID card must be purchased. The Affordable Care Act does not require individuals to purchase new ID cards. If approached by such an individual, whether in person, over the phone, or by email, it can be safely assumed to be a scam.
Fake Insurance Websites: There are many websites which may appear to be a legitimate insurance agency but are not. This is similar to unlicensed insurers but worse. There is no company incorporated as an insurance agency. These sites sell entirely made up policies and collect payment for them. Sometimes, certain sites may try to appear as a reputable insurance agency. They will change the domain name slightly, in a way many people may not notice. Everything else on the site looks the same.
Opportunistic Sellers: “A common scam occurs after natural disasters in which individuals approach people who have suffered property damage under the guise of selling them favorable insurance policies. It is also the case that opportunistic insurance agents may work with homeowners to file inflated claims, often claiming repairs and other work that was not done, or inflating the cost of the work,” says Sam Hillary, a journalist at Essayroo and Assignment Writing Service. Sometimes the homeowners simply think that the insurance agent is looking out for them when in reality they are being put at risk of legal prosecution.
The best way a consumer can protect themselves from insurance fraud is by always working with a reputable, well-reviewed, insurance agency or broker. One should also take care to not give out personal information over the phone if they feel the caller may not be who they say they are.