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What New Insurance Adjusters Need To Know About Fraud

Insurance fraud occurs when an insurance company, agent, adjuster or consumer commits an intentional falsification in order to obtain an illegitimate gain. It can occur during the process of buying, using, selling or underwriting insurance. Insurance fraud can fall into different categories from individuals committing fraud against consumers to individuals committing fraud against insurance companies. Insurance fraud, estimated at over a hundred billion dollars per year, not only imposes costs on insurance companies, but it is also financially damaging to consumers.

How Adjusters Can Prevent Fraud

For adjusters, proper documentation is critical for preventing fraud against insurance companies. The adjuster should obtain copies of all relevant and material records from the insured. These include:

  • Leases;
  • documents establishing title to real property (deeds and trust deeds);
  • the last physical inventory;
  • receipts, invoices, purchase orders, and other evidence of purchase and ownership;
  • the general ledger of the business;
  • the banking records of the business for at least the 6 months before the loss; and
  • any other document that might be relevant or material to the investigation.

Most insurance policies contain provisions requiring the insured or claimant to cooperate in the investigation of a claim and to produce certain documents and information in support of the claim. Documenting the claim is important because it commits the insured or claimant to a position with respect to the claim. After committing to a position, the veracity and legitimacy of the claim can more easily be tested.

How Consumers Can Recognize Fraud by Insurers

Consumers should be on the lookout for the following warning signs, as they may indicate that an insurance company is fake:

  • If an agent or broker is very aggressive and pressures a consumer by saying they must sign up for a policy right away (sometimes adding…or the premiums will go up).
  • The premiums from one company are a lot lower (more than 15-20% less) than other companies’ comparable coverage.
  • When a consumer tries to call the insurer to get more details or ask a question, they can’t find a listed phone number, or it is very difficult to get through on the phone.

Fighting fraud is an important aspect of state regulation . To help fight the growing problem of insurance fraud, the NAIC created a uniform fraud reporting system through which consumers and insurance departments can electronically report suspected fraud to the appropriate insurance department. Public attitudes have sometimes hampered insurers in their fight against fraud. People may retaliate in order to “get a return” or “get their money’s worth.”

2021 Training 

Our training will prepare you to recognize fraud and help you deal with these situations. We’re here for you when you are ready to take the next step in your education with us. We have been equipping new and experienced adjusters with online training courses since 2008. Our experienced instructors know what it’s like in the field and can prepare you for success. Buy online or give us a call today to get started!

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