Insurance
Fraud Investigators Are Watching!
Insurance fraud occurs most often when an insured individual
or entity makes a false or exaggerated insurance claim, seeking compensation
for injuries or losses that were not actually suffered. Insurance fraud can
also be committed upon customers, through 1) the sale of unlicensed or bogus
insurance coverage to unsuspecting clients, or 2) an insurance broker or
agent's diversion or theft of insurance premiums paid by clients.
Definition
of Insurance Fraud
Insurance fraud refers to any duplicitous act performed with
the intent to obtain an improper payment from an insurer. Insurance fraud is
committed by individuals from all walks of life. Law enforcement officials have
prosecuted doctors, lawyers, chiropractors, car salesmen, insurance agents and
people in positions of trust. Anyone who seeks to benefit from insurance
through making inflated or false claims of loss or injury can be prosecuted.
The pervasiveness of insurance fraud drives up costs for all
consumers and costs the insurance industry billions of dollars each year. One
authority estimates that the annual value of insurance fraud approaches $80
billion. Detecting insurance fraud is difficult because of the surreptitious
nature by which the criminal perpetrates the fraud.
Depending on the specific issues involved, an alleged
wrongful act may be handled as an administrative action or law enforcement may handle
it as a criminal matter.
Types of
Insurance Fraud
Investigators and prosecutors typically refer to an insurance fraud
scheme as either “hard fraud” or “soft fraud.”
• Hard Fraud: Someone deliberately fakes an accident,
injury, theft, arson or other loss to collect money illegally from insurance
companies. Crooks often act alone, but increasingly, organized crime rings
stage large schemes to steal millions of dollars.
• Soft Fraud: Normally honest people often tell "little
white lies" to their insurance company for the purposes of filing or
maximizing a claim. Many people think it's just harmless fudging. But soft
fraud is a crime, and raises everyone's insurance costs
