Tips for Insurance Fraud Prevention and Why You Want to Prevent Insurance Fraud
According to the Coalition Against Insurance Fraud, the average household’s insurance cost is increased by $300 a year due to fraudulent claims and insurance fraud costs Americans billions each year. As the second most costly white-collar crime in the U.S. (behind tax evasion), insurance fraud is not something to ignore- you don’t want to become a victim and to do that you need to understand how to protect yourself.
What is insurance fraud?
Insurance fraud occurs when any act is committed with the intent to fraudulently obtain some benefit or advantage to which they are not otherwise entitled or someone knowingly denies some benefit that is due and to which someone is entitled.
Who commits insurance fraud?
Insurance fraud can be committed by both claimants and insurance company employees. Insurance fraud is committed when either of the aforementioned file a false insurance claim with the intent of defrauding an insurance provider.
Why do you want to prevent insurance fraud?
Insurance fraud doesn’t just affect insurance providers. The effects cause everyone’s insurance costs to go up so it’s in everyone’s best benefit to try and avoid it. Insurance protects us from risks and when one person commits insurance fraud, it lowers the providers trust for everyone. Insurance agencies expect claimants to be honest with them about risks and losses, and in turn consumers expect insurance companies to protect them. Insurance fraud increases costs of doing business for insurers which leads to lower dividends for shareholders and higher costs for consumers.
So how do you prevent insurance fraud?
Whether you’re a consumer or a business, there are ways to help prevent fraud. It’s important to always report any instances of fraud, and with sophisticated technologies, it has become easier for investigators to identify those committing crimes. It’s important that consumers are aware of the risks of insurance fraud and understand what it entails. On the business side, you want to make sure that you take a hard stance against fraud and that this is clear to employees. You want to make sure they are educated and understand the repercussions of insurance fraud. The most important way to prevent insurance fraud is to report suspicious activity and make sure you and your employees are informed.