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!
Suspicious Signs of Insurance Fraud
5 Suspicious Signs of Insurance Fraud to Watch Out For
Insurance agencies devote a lot of time and resources to detecting fraudulent claims. That’s because insurance fraud has always been a problem, and rates are on the rise. Even if fraud investigation isn’t your primary duty as an insurance claims adjuster, you’ll still need to know which red flags to watch out for when interviewing claimants and making your report. As someone who’s been in the insurance industry since 2008, I’ve developed a good sense of who is telling the truth and who is trying to be shady. Now I’m here to help you sharpen your lie-detection skills as well.
Some people commit insurance fraud because they think it’s a victimless crime and an easy way to make money. Nothing could be further from the truth. According to the FBI, insurance fraud is a $40 billion industry that costs American families between $400 and $700 a year in higher insurance premiums. There are many ways claimants try to defraud insurance companies. Here are some of the warning signs of insurance fraud you might encounter on the job.
Insurance Fraud Red Flags:
Convenient Coincidences
This red flag is a movie cliché for a reason. A person takes out an insurance policy on someone or something, and then that someone or something dies or gets destroyed. As the beneficiary of the insurance policy, the person stands to profit from this misfortune. It’s not always as dramatic as the movies make it out to be, but you should be aware of cases where the timing is just a little too good to be coincidental.
Long Claims History
If a person has a long history of filing insurance claims at the drop of a hat, they could be an unlucky individual, or they could be trying to game the system. This type of fraud is commonly attempted by reporting a car stolen or reporting valuable items missing after a break-in. Anyone who has ever submitted a claim has a file where their habits of reporting losses are analyzed. Any claims that don’t match the established pattern could be investigated further.
Guilty Associations
Claimants aren’t the only ones out to take money from insurance companies. Chiropractors, roofers, personal injury lawyers, and even doctors sometimes base their business on padding estimates and billing for services that were never rendered. You’ll quickly get to know the personal injury mills and shady operators in your area. If a claimant has partnered up with one of these types, it’s not a good sign.
Social Media Tip-Offs
There’s no shame in stalking a claimant’s social media to see if they’ve been talking about their loss or injury. Obviously, there are many people who don’t share their private business on social media, but it’s a pretty compelling case for fraud if someone is claiming to have physical injuries, but livestreams themselves surfing at the beach. Look for behaviors and photos that don’t match the person’s purported circumstances.
Something’s Just Off
Remember that sixth sense I said you’d develop when it comes to dishonesty? Some cases just set that off. Maybe the claimant seems more excited to get a check than concerned about the serious property damage or injury they’ve experienced. Maybe their receipts are all hand-written. Once you’ve worked enough cases, you’ll get a sense of what’s normal and what’s not, and you’ll learn when to trust your gut.
Learn All You Need to Know with 2021 Training
When you choose 2021 Training, you get the benefit of my years of experience in the insurance industry as I share real-world advice to help you during deployments and with your day-to-day work. Get personal access to me and your other instructors whenever you have questions about the curriculum. We’re here to help you succeed in your career as a licensed insurance adjuster. Check out our program today!
