4 ways insurance companies can detect insurance frauds

Insurance companies lose billions of dollars in fraud acts. There are many ways an insurance company can detect insurance scams. There are four ways insurance companies can track down people involved in fraud acts.

History of claims

The insurance company analyzes the client’s history of making claims against an insurance policy. Some companies have a limit on the number of claims before the termination period of the coverage. This helps to protect the company against risk. Many people make frequent claims. For example, if a person has already filed claims for losses due to theft in the past year, then the insurance company will analyze the details related to the claims. They will discuss the issue with the police officers to find out whether the client is telling the truth or not.

Third parties

The insurance industry gets reports of fraud from third parties who try to get the inside information about an incident. These third parties called ‘whistleblowers’ find out whether it was a fraudulent claim. If they are successful in getting back the money that was taken falsely, then the whistleblowers are awarded a portion of the money recovered.

Analysis

The insurance company analyses the claim and compares it to the others. Claims which are for certain types of insured risks fall within a particular range. If some claims are on the high side of the average are turned over to insurance investigators. They further review the case and analyze them. If the claim is high, the insurance company requires extra proof. They might also inspect the situation in person.

Surveillance

Insurance companies can monitor clients directly using surveillance cameras. This is common in cases of disability insurance claims. In this case, the client claims injuries that stop them from working. The client is asked to fill out a questionnaire when applying for benefits. In the questionnaire, the client has to document his or her daily activities that he or she can perform after the accident. The insurance company will look at the video surveillance that was installed at the client’s properties. If the mobility of the client matches with what he or she mentioned in the questionnaire, then they give them.

Insurance companies have become more alert now of these kinds of fraudulent activities. They don’t pay the money for the claim without investigating things further. If you are caught once that you have made a fraud claim, then you won’t get the insurance money, and your reputation will be ruined. So, you must be honest all the time. If you claim truthfully, you will get whatever you are eligible for.

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5 most common types of insurance frauds

It is now very normal for people to cheat insurance companies out of money. It is estimated that insurance companies lose about $30 billion per year for insurance fraud costs. Here are the most common types of insurance frauds.

Stolen Car

1

There are two types of fraudulent activities involved in the case of stolen cars. First, the car owner can sell his or her car to a body shop and ask them to cut up the parts and file a claim for a stolen car. Another way is to sell the car to oversees buyers with a paperless transaction and then reporting it as being stolen.

Car Accident

2

The driver and the victim team up and set the stage. Sometimes even the insurance investigators become also part of the game. The payoff is huge, especially when the accident involves two cars.

Car Damage

3

People report a small car accident and get their claims for the damages, but never repairs the car. This type of incidents is frequently happening. The insurance company has to lose a lot of money for this.

Health Insurance Billing Fraud

4

The health care professionals also get involved in the fraud act. They bill insurance companies a high fee for a normal procedure or bill for services that the patient never rendered.

Fake Home Fires

5

A common form of homeowners insurance fraud is a staging a fake fire. The homeowner removes the important belongings before the fire. In every case, the homeowner doesn’t stay at home when the fire occurs. A criminal is hired to do the job.

Some of these activities are a criminal offense. If you are caught, you will serve many years in jail and have to pay a lot of money in compensation. So, never get involved in such act.