Even though the thief may think they and their insurance agent are the only people affected by insurance fraud, insurance fraud actually costs Americans more than 40 billion dollars a year. And unfortunately, that number is on the rise. Take a look at these signs of insurance fraud, so you can spot them and report it if needed.
Filing an Unusual Amount of Claims
This is easily apparent when it comes to homeowner’s or car insurance. If you as the insurance agent notice any strange claim patterns, that is definitely a red flag. If there were a lot of claims filed in a row, especially if someone is repeatedly reporting their car as missing, there may be a case of fraud going on. Insurance carriers can and will investigate these sorts of red flags. And most companies keep records of every claim filed. They can find out what kind of claim is likely to be filed, when, and where (thanks to the Actuaries). If someone’s pattern doesn’t add up, that’s usually a sign there needs to be an investigation.
Destroying Property By Arson
If a fire occurred during a renovation or to a building that already has structural damage, there are no accidental or natural causes of the fire that have been proven, or if the fire spread unnaturally and caused excessive damage to the property, you could have an arson case on your hands. Another indicator is if all the pets are safe, and other valuables that are sentimental to the family were removed from the home and are safe and sound. Additionally, if there were objects blocking the way for fire fighters to do their jobs and put the fire out, or if doors and windows are blocked by objects, keeping fire fighters out of the building, then it’s probably arson.
I’m reminded of an incident years ago near where I grew up. A long-time restaurant was sold and transitioning to new ownership. The name of this new gem was, not coincidentally, the “Fire Side Family Restaurant”. You’ll never guess what happened! Arson you say? Bingo! In the end the owners were prosecuted for insurance fraud and arson.
This typically only happens with auto insurance and repairs from an accident. Most car mechanics these days use some sort of automated technology, and there aren’t a lot that will use hand-written receipts. If someone files a claim for car repairs, and there is a significant amount of money, if it’s handwritten or has several “scratch outs”, it might be a scam. Are the numbers hard to discern and is it hard to make heads or tails of the work done in relation to the cost? It’s more than likely fraud. Ask for an itemized receipt with the mechanic’s logo and signature on the paperwork. There’s a reason that vehicle ownership documents must have no mistakes or correction scratches.
Increased Coverage Right Before a Filed Claim
Your client just upgraded their policy to the Cadillac of insurance out of the blue last week. Today, you just received a phone call from this same client saying they need to file a claim because there was a car accident or a fire at their home. Here’s your sign. Most things just aren’t that much of a coincidence. At the very least, it would be a smart idea to investigate further before coughing up the dough. People can stage car accidents quite easily, and they can also report their vehicles as stolen property by having their friends or family “steal” their car and hide it. Don’t let these people take advantage of you. Investigate as thoroughly as possible.
Of course aside from the property and casualty side of the coin, health and life insurance have fraud issues also. Dramatic increases in life insurance policy coverage or someone taking a policy out on another person can be signs but certainly not always. Most people do those two things with the best intentions but there are a very select few who are just looking to game the system.
Personal Injury Claims Don’t Add Up
If there are no witnesses, an injured worker who takes more days off to heal than the injury warrants, or if the injured party delays reporting the accident to the insurance agent, this is probably fraud. The day of the week the accident is reported is also a good indicator of whether the client is being truthful or not. If they file their claim on a Monday morning, then they were probably injured doing something over the weekend, and not at work. If they are filing a worker’s compensation claim, this is definitely a red flag.
Insurance company investigators love these. Not because they are open and shut or necessarily different than other fraud cases, but because sometimes a claimants social profiles offer immediate and clear evidence of fraud. Posting pictures of a water skiing weekend on the lake when a policy holder’s claim was a bad back might not do so well in court. They had some sweet wake jumps though…and maybe some an extended vacation from work in the near future to hone their slalom technique.
Doctors can be accused of insurance fraud, as well. It’s not always just your client. Physicians can be accused of “double billing,” which means they bill for treatments that they didn’t perform, or they bill for a service that is more expensive instead of the cheaper option that would result in the same care. This is especially true when working with patients who are covered by Medicaid or Medicare. They try to earn more by over treating their patients. Examples of over treatment include scheduling unnecessary follow-ups, referring patients to specialists when it is unneeded, and performing unnecessary tests that aren’t usually administered to a patient who has non-emergent symptoms.
Do you have a unique story about fraud or have you had to refer someone to a carrier? Share your story below.