Insurance policies are structored to fit specific needs of the customer. Agents or Brokers have been accused or have been found guilty of insurance fraud. Whole Life, Term Life, Variable Life and other policies are potential targets of fraud.

Fraud cases can come from actions that include:

• Switching or changing policies without customer authorization
• Providing false policy information
• Money laundering and unauthorized wiring of customer assets.
• Providing false benefits
• Selling insurance policies that do not exist.

Understanding Insurance Fraud

Insurance fraud is the second costliest white-collar crime in America, after tax evasion. It is estimated that $80 billion is paid out each year in fraudulent insurance claims. It is estimated by the Coalition Against Insurance Fraud that the average American household pays over $950 a year in additional premiums to cover the cost of insurance fraud. According to industry estimates, healthcare fraud alone costs Americans $54 billion a year.

The Insurance Research Council revealed some alarming information obtained from a recent survey regarding types of insurance crime that is considered "acceptable" by an unusually high percentage of the public. These types of insurance fraud include the following followed by the percentage of those surveyed who felt that it was acceptable:

• Increasing the claim to cover the deductible - 40%
• Increasing the claim to cover the premiums paid - 36%
• Including defective or obsolete appliances on a lightning claim - 29%
• Listing adults as main driver of a car being driven by an under age driver - 20%
• Omitting accidents/tickets from an insurance application - 14%
• Continuing medical treatment to increase the value of a claim - 11%
• Pretending a hit-and-run accident occurred to submit a claim - 7%
• Abandoning a car and reporting it stolen to the insurance company - 6%
• Reporting an injury at home as work related in order to collect workers' compensation benefits - 10%
• Cooperating with lawyers, doctors or chiropractors to file false or exaggerated workers' compensation claims to get money from insurers - 17%

Insurance fraud typically consists of the following types or instruments of fraud:

• Workers’ compensation premium fraud occurs when an employer provides false information in order to obtain a lower insurance rating.
• Workers’ compensation fraud occurs when an employee files an inflated or false injury claim in order to receive benefits or increase benefits.
• Staged accident fraud occurs when a person intentionally causes or is involved in an accident, or walks in and reports an accident in order to compensation or false or intentional damages and injuries. This could include automobiles or fake “slip and fall” claims.
• Property fraud is the falsification or inflation of a claim for the loss of personal or commercial property in order to obtain benefits. This includes losses due to the theft, disaster, or arson of insured property and vehicles.
• Benefits fraud occurs when an uninsured person receives benefits reserved for an insured person as it relates to his or her policy. A typical example of benefits fraud includes a non-covered dependant receiving medical or dental treatment by using a parent’s name or identity. Similarly, we have seen friends and roommates commit benefits fraud as well.

There are certainly many other types of insurance fraud, but these are clearly the most prevalant.

The first step in uncovering insurance fraud is to identify some of the most ordinary clues, or “red flags,” that signal possible dishonesty in an insurance claim. These red flags are facts or information that will require further investigation into the nature of the claim.

Once the “red flags” are identified, it is paramount that a complete investigation then be conducted! A written or recorded statement locks the claimant into a set of facts that cannot be easily changed, especially when confronted by a contradictory video or photographic surveillance product. For this reason statements from all parties and witnesses involved in an insured loss should be the very first entries in a claims file.

L. Scott Harrell is the author of Statements, Lies and Videotape: An Investigator's Guide to Insurance Claim Investigations, a manual which completely and accurately describes proven investigative methods developed from 14 years of experience as a private investigator and principal of CompassPoint Investigations.

More information regarding CompassPoint Investigations can be found via his website: http://www.CompassPointPI.com

Helpful Book Titles

Personal Injury Insurance Fraud: The Process of Detection A Primer for Insurance and Legal Professionals - Fraud is commonly defined as deliberate deception for unfair or unlawful personal gain. Patients, physicians, other medical providers and attorneys all may engage in fraud. Healthcare fraud is a major growth industry that costs millions annually, which cost is passed on to the public. It is not a problem that will correct itself. Any attempt to eradicate fraud must include prevention, investigation, and prosecution. Dr. Lichtor presents many examples of accidental injury, such as auto accidents, slip and falls, home hazards, and more. You will learn the ways to investigate claims and discover whether a claimant has truly been injured. You will also read about the current methods of prevention. Essential to this task is physician compliance with federal regulations for documentation and conformance with recognized medical guidelines for patient evaluation, management and billing. To stop doctor-patient deception, there must be early validation of an injury claim and limitation of services in accordance with acknowledged need and natural history of the alleged condition. Since every true accident will leave a paper trail, including medical records and police reports, this is one important way to catch people attempting to commit fraud. Learn about the others by ordering this book today.

Insult to Injury : Insurance, Fraud, and the Big Business of Bad Faith (Bk Currents) - Joan Hangarter bought a disability policy in 1990 to protect her in case of serious illness. When she did become disabled a decade later, she ended up homeless and on welfare when the company refused to pay. With the help of her attorney, Ray Bourhis, she fought back, winning a $7.7 million verdict against the company. In Insult to Injury, Bourhis walks readers through this case study in bad faith double-dealing by insurance providers. Bourhis, a national champion of policy-holder rights, uses an engaging narrative style to reveal the back-room strategic mind-set that drives these illegal practices, how low-level employees are duped into unethical conduct, and how insurers manipulate data and witnesses in the few cases that do go to trial. He also explains the key regulatory oversights that encourage such corruption, and how the American legal system actually facilitates insurer fraud. Insult to Injury closes with a roadmap to reform — advice no one who holds a policy can afford to ignore.

Fraud Examination - Updated and enhanced to help readers better understand the significance of fraud in the modern accounting world, this provocative text prepares readers to identify, detect, investigate, and prevent financial fraud. It outlines the nature of fraud and the different types of fraud, including the unique e-business fraud that is now possible in today's technological world. Chapter 6 offers expansive, cutting-edge instruction on the role of data analysis in fraud detection as well as two entire chapters on investigating theft and concealment This edition includes an all new chapter on consumer fraud, and Chapter 16 contains new material on tax fraud?providing students with unique insight into fraudulent tax reporting activities. End-of-chapter materials have been enhanced, and the Financial Statement Fraud Standards Appendix at the end of the text has been updated to include information about SAS 99 and Sarbanes-Oxley.

Principles of Fraud Examination - An introduction to fraud detection and prevention for today's accounting students! Accountants have historically played an important role in the detection and deterrence of fraud. As future accountants, your students will be on the front lines of the effort to prevent future financial scandals. If called upon, one of their greatest tools in this effort will be a deep understanding of why and how people engage in fraudulent behavior. In Principles of Fraud Examination , Joseph Wells (founder and Chairman of the Association of Certified Fraud Examiners) provides a wealth of informative and entertaining insights into the complex social factors behind fraudulent behavior. The text also provides a broad overview of the field of Fraud Examination--from what fraud is, to how it is committed, detected, and deterred. Coverage begins with an explanation of fraud examination methodology, followed by detailed examination of the most prevalent fraud schemes used by employees, owners, managers, and executives. Features The text is based on the three main categories of occupational fraud and abuse (asset misappropriation, corruption, and fraudulent statements) and 13 principal schemes, as identified by the Report to the Nation on Occupational Fraud and Abuse, first issued in 1996 and last updated in 2004. Chapters explain the major schemes and provide relevant statistics on cost and frequency, as well as the perpetrators and victims of these crimes. Each scheme is illustrated with several real-life cases. The text clearly outlines prevention, detection and investigation strategies. Essential terms, questions, and discussion issues help students understand and retain the material.

If you feel you have been a victim of insurance fraud, you should retain all of your records and consider contacting an attorney or lawyer specializing in fraud cases. Use the links provided or search for more here: