By Dez Duran-Lamanilao
Anyone can fall victim to insurance fraud. In fact, estimates suggest that it may be the second biggest economic crime in the US. Fraud can cause serious financial implications on consumers, the government and businesses. The National Heritage Insurance Company underwent one of the biggest insurance failures after New Yorker Rabbi Sholam Weiss of Brooklyn looted the company of over $ 450 million. The 845-year sentence imposed on Weiss is one of the longest convictions ever given for a white-collar crime.
Image source: Prince Glover & Hayes Law
When a fraud happens, there is always a possibility that the costs of false claims are passed onto policyholders. The Federal Bureau of Investigation (FBI) has identified some of the most common schemes of insurance fraud:
- Premium diversion – the embezzlement of insurance premiums; the most common type of insurance fraud
- Fee churning – when the initial premium is reduced by a series of commissions until there is no longer money to pay claims
- Asset diversion – the theft of insurance company assets
- Workers’ compensation fund misappropriation
How do you keep scammers from victimizing you? Here are some tips to keep in mind when dealing with other people especially with strangers:
- Be an informed consumer. Understanding the cost of premiums or annuity products can help you arrive at a decision that will most benefit you.
- Do not immediately disclose personal information to phone calls from strangers, including those who knock on your door.
- Ensure that only you and a trusted family member know your Medicare ID number.
- Always demand for a copy of your policy and proof of payment(s).
- In cases of vehicle accidents, take photos of vehicles and the damage incurred, including the passengers, to prevent fake injury claims. Auto insurance fraud is a multi-billion dollar problem plaguing the industry. Some of the most common deceptions include a staged accident, inflated claims and those involving “runners,” who solicit the injured parties at the accident scene and direct them to medical facilities that are involved in the deceit.
Finally, remember to deal only with licensed agents and brokers so you do not have to worry about looking for them when it is time to seek their assistance. It is your right as a policyholder to be given an exemplary service, one that includes protection from possible insurance fraud.