Insurance fraud is when fraud is involved in the insurance process. This can be the case when someone makes a false claim from an insurance company. It could also be when the insurance company refuses to pay the plaintiff. Statistics show that the number of insurance frauds perpetrated globally is increasing.
The motive behind insurance fraud is greed. People are always seeking financial gain through insurance fraud. There are cases where people overinsure their property. Then they destroy it on purpose to claim insurance.
Types of insurance fraud:
Life insurance:
Individuals take policies to ensure their lives. When there is a reasonable amount, they fake the death and their heirs claim the amount. They may show up after a few years and claim that they are suffering from memory loss.
Health Insurance:
This is when plaintiffs provide insurance companies with false information to take advantage of them. Insured people commit this type of fraud in a number of ways. Some of the common ways are:
• Permit the use of their policy information by others.
• There are cases where people claim the amount spent to pay for prescriptions that were not prescribed by their doctor.
Medical providers also commit this type of fraud. They may charge for services they have not provided supplies they may not use or even amend existing claims.
This type of fraud is also carried out by health insurance companies. They may remove the claim from their records, they may not pay the plaintiff or even deny coverage to the original party.
Car insurance:
To claim insurance, people commit accidents and collisions. It is also claimed when people report car theft. Can also be claimed for damage that existed before the policy was taken. Sometimes people claim coverage for possible accidents before taking out the policy.
Property insurance:
In this case, people damage their property to make a claim. Sometimes they destroy things that are not very valuable and demand a higher amount. Individuals even fake theft to make claims. Sometimes people claim a second insurance after being covered by one of the insurance companies.
Insurance fraud affects society as a whole. False claims cost insurance companies huge losses. To make up for this loss, these companies increase the premiums of honest policyholders. Therefore, honest citizens paid the price without their fault.