There are many different types of insurance fraud detection, which are usually based on the sort of insurance fraud being attempted. For instance, life insurance fraud, is normally executed at the point of making the application for life insurance, and is usually detected by the agent’s intuition or the insurers’ underwriting procedures.
However, property insurance fraud is commonly committed after a policy has been put in force for a period of time, by then damaging, ruining or pilfering the insured property and is in most cases best detected via a post-loss investigation.
Why Premiums are so high
The importance of insurance fraud detection and prevention is highlighted by the fact that hundreds of billions of dollars are paid out annually in fraudulent claims. If insurance fraud were completely eliminated, premiums would decline significantly. Thus, while insurance fraud detection is a named element of an insurance agent’s job, it’s also the responsibility of all consumers and why online DBS checks have increased in popularity.
In the world of insurance fraud, it can take many different forms:
- Health insurance fraud is the filling in of false claims, usually for injuries and illnesses that never happened.
- False claims get filed in after a staged car accident and can cost an insurance company tens of thousands of pounds.
- In other cases, legitimate claims get inflated, especially when an injury is difficult to verify, such as a back injury.
- Also, this can apply where a worker is absent from work as a result of an injury and claims to be unfit to work, but is actually working in some other place at the very same time.
- The number of injury claims filed in the United Kingdom makes it somewhat impossible for an insurance company to carry out an investigation of each one, so they have to give priority in their research of the most costly claims.
- Scammers, are well aware of this fact, and often try to avoid detection by filing smaller claims.
- To combat fraud, a lot of insurers require that their health insurance policyholders get a second opinion for any serious diagnoses.
- Vehicle insurance fraud is the filing of a false claim against an insurance policy, and a favoured scheme is where a car is left some place where it’s likely to be stolen, and then file a claim for the stolen vehicle after the expected crime happens.
- Also, occasionally policy holders sometimes try to carry out a low-level fraud by asking a repair shop to provide an inflated invoice, with the excess being divided between the policy holder and the repair shop.
- And then there’s property insurance fraud which involves man-made events such as fires or floods.
- For instance, a homeowner might set a building on fire to collect the insurance, or may claim that an insured item was stolen after a break in.
There are other types of fraud out there going on daily, so it’s in your best interests to run a professional background check to assist in detecting insurance fraud.