Insurance cheating is any action taken with a view to obtaining fraudulent proceeds from the insurance process. This can happen when plaintiffs try to get some of the benefits or benefits they are not entitled to, or when the insurance company consciously rejects some of the benefits that should be paid. According to the United States Federal Bureau of Investigation, the most common schemes include: Premium Transfer, Cost Redirection, Asset Rescue, and Workers' Compensation Fraud. The perpetrators in this scheme may become employees of the insurance company and the claimant. Fake insurance claim is an insurance claim filed with a view to deceiving the insurer.
Insurance cheating has existed since the beginning of insurance as a commercial company. Fraudulent claims account for most of all claims received by insurance companies, and billions of dollars per year. This type of insurance fraud varies, and occurs in all areas of insurance. Insurance crime is also diverse, from claims that slightly exaggerate to deliberate accident or damage. Fraudulent activity affects the lives of innocent people, either directly through accident or intentional or deliberate damage, and indirectly because these crimes lead to higher insurance premiums. Insurance fraud poses significant problems, and governments and other organizations make efforts to block such activities.
An epigram by Roman poet Martial provides clear evidence of the phenomenon of insurance fraud already known in the Roman Empire during the First Century AD:
- "Tongilianus, you pay two hundred for your house;
- The overwhelming accident in this city destroyed it.
- You accumulate ten times more. Does not it seem, I pray,
- That you burned your own house, Tongilianus? "
Book III, No. 52
Video Insurance fraud
Cause
"The main motive in all insurance crimes is financial gain." The insurance contract provides both the insured and the insurance company with opportunities for exploitation.
According to Coalition Against Insurance Fraud, the causes are diverse, but usually center on greed, and on the hole in protection against fraud. Often, those who commit insurance fraud view it as a low-risk, profitable company. For example, drug dealers who have entered insurance fraud think it is safer and more profitable than the working street corner. Compared with other crimes, court penalties for insurance fraud can be mild, reducing the risk of extended penalties. Although insurance companies try to fight fraud, some will pay off suspicious claims anyway; resolving such claims is often cheaper than legal action.
Another reason for fraud is over-insurance, when the insured amount is greater than the true value of the insured property. This condition can be very difficult to avoid, especially since insurance providers sometimes encourage them to earn bigger profits. This allows fraudsters to make a profit by destroying their property because the payments they receive from their insurance company have a greater value than the property they destroy. The most common forms of insurance fraud are reframing the uninsured damage to make it an event covered by insurance and inflating the value of the loss.
Insurance companies are also vulnerable to fraud as it is possible for fraudsters to file claims for damage that never happened.
Maps Insurance fraud
Loss due to insurance fraud
It is difficult to place a definite value on the money stolen through insurance fraud. Insurance cheating is intentionally undetectable, unlike a crime that looks like a robbery or murder. Thus, the number of detected insurance fraud cases is much lower than the actual number of actions performed. The best thing that can be done is to give an estimate of the loss borne by insurance due to insurance fraud. The Coalition Against Fraud Insurance estimates that in 2006 a total of about $ 80 billion was lost in the United States due to insurance fraud. According to estimates by the Insurance Information Institute, insurance fraud accounts for about 10 percent of the property insurance losses/casualty casualty industry and the cost of adjustment for losses. The National Health Care Anti-Fraud Association estimates that 3% of health care industry spending in the United States is due to fraudulent activity, costing about $ 51 billion. Another estimate linked as much as 10% of total health care spending in the United States for fraud - about $ 115 billion per year. Another study of all types of fraud committed in US insurance agencies (property and casualties, business liability, health care, social security etc.) Puts the actual cost at 33% to 38% of the total cash flow through the system. This research produced the title of "The Trillion Dollar Insurance Crook" by J.E. Smith. In the UK, the Insurance Fraud Bureau estimates that losses due to insurance fraud in the UK are around Ã, Â £ 1.5 billion ($ 3.08 billion), leading to a 5% increase in insurance premiums. The Canadian Insurance Bureau estimates that personal injury fraud in Canada costs around C $ 500 million per year. Indiaforensic Center of Studies estimates that Insurance fraud in India costs around $ 6.25 billion per year.
Hard vs soft fraud
Insurance fraud can be classified as hard fraud or soft fraud.
Hard fraud occurs when a person deliberately plots or creates a loss, such as a collision, theft of a car, or a fire covered by their insurance policy to receive payment for damages. Criminal rings are sometimes involved in harsh fraud schemes that can steal millions of dollars.
Soft fraud , which is much more common than loud scams, sometimes also referred to as opportunistic fraud. This type of fraud consists of policyholders who overestimate claims that are otherwise valid. For example, when involved in an automotive collision, the insured person may claim more damage than is actually happening. Soft fraud can also occur when, when acquiring a new health insurance policy, someone misreported a previous or existing condition to get a lower premium on the insurance policy.
Type of insurance fraud
Life insurance
Cheating life insurance may involve pretending to die to claim life insurance. Fraudsters sometimes appear several years after disappearing, claiming memory loss.
An example of life insurance fraud is the case of John Darwin's disappearance, which is an investigation of pseudocide actions by former British teacher and prison officer John Darwin, who appeared alive in December 2007, five years after he was alleged to have died in a canoe accident. Darwin was reported as "missing" after failing to report to work after a canoe trip on March 21, 2002. He reappeared on December 1, 2007, claiming to have no memories for the past five years.
Another example is the former British Government Minister John Stonehouse who lost in 1974 from a beach in Miami. He was found living under a pseudonym in Australia, extradited to England and jailed for seven years for fraud, theft, and forgery.
Health care insurance
Health insurance fraud is described as a deliberate act of deceiving, hiding, or misrepresenting information that results in health benefits paid to individuals or groups.
Fraud can be done by an insured person or by the provider. Member fraud consists of claims on behalf of unqualified and/or dependent members, changes to the registration form, hiding pre-existing conditions, failure to report other coverage, prescription drug fraud, and failure to disclose claims that are the result of work related injury.
The fraudulent provider consists of claims filed by a fake doctor, billing for services not provided, billing for higher-level services, diagnoses or treatments that are outside the scope of the practice, changes to claims filing, and providing the service while the medical license is suspended or revoked. Independent medical examinations disprove false insurance claims and allow insurance companies or plaintiffs to seek non-partial medical views for injury-related cases.
According to the Coalition Against Insurance Fraud, health insurance scams spend a lot of taxpayer funded programs like Medicare, and can sacrifice patients in the hands of certain doctors. Some fraud involves double billing by doctors who charge insurance for treatments that never happen, and surgeons who perform unnecessary surgery.
According to Roger Feldman, Blue Cross Professor of Health Insurance at the University of Minnesota, one of the main reasons for medical fraud is a common practice is that almost all parties involved feel favorable in some ways. Many doctors see it necessary to provide quality care for their patients. Many patients, while not agreeing with the idea of ​​fraud, are sometimes more willing to accept it when it affects their own medical care. Program administrators are often soft on the issue of insurance fraud, as they want to maximize the services of their providers.
The most common health insurance scams are health care providers. One of the reasons for this, according to David Hyman, a Professor at the University of Maryland Law School, is that the attitude that historically applies in the medical profession is one of "loyalty to the patient". This incentive may lead to fraudulent practices such as billing insurance for treatments not covered by the patient's insurance policy. To do this, doctors often charge different services, which are covered by the policy, not the ones they provide.
Another motivation for insurance fraud is the desire for financial gain. Public health care programs such as Medicare and Medicaid are highly conducive to fraudulent activities, as they are often run on a cost-for-service structure. Doctors use some fraud techniques to achieve this goal. This may include "up-coding" or "upgrades," which involve billing for more expensive treatments than is actually provided; providing, and then billing for, medically unnecessary treatments; schedule extra visits for patients; refer the patient to another doctor when no further treatment is needed; "phantom billing," or billing for services not provided; and "ganging," or billing for services to family members or other individuals accompanying the patient but not personally receiving any services.
Perhaps the largest total fraud of money was made by the health insurer itself. There are many studies and articles detailing examples of insurance companies that deliberately do not pay claims and remove them from their systems, refuse and cancel coverage, and payments in the shadows to hospitals and doctors under what is a normal cost of care which they provide. Although it is difficult to obtain information, these frauds by insurance companies can be estimated by comparing income from premium payments and expenses for health claims.
In response to the increasing number of health care frauds in the United States, Congress, through the Health Insurance Portability and Accountability Act of 1996 (HIPAA), has specifically established health care fraud as a federal criminal offense with up to ten years in prison in addition to significant financial penalties.
Car insurance
Groups or groups of fraud may deceive a traffic death or stage crash to create fake insurance or excessive claims and collect insurance money. The ring may involve aligning an insurance claim and another person making a fake police report to process the claim.
The UK Fraud Bureau estimates there are over 20,000 staged collisions and false insurance claims in the UK from 1999 to 2006. One of the tactical imposters used is driving to a busy intersection or turning and braking sharply causing drivers to drive backwards. They claim other drivers are at fault because they are driving too fast or too close behind them, and making false claims and increasing to caregivers for whiplash and damage that can give frauds up to Ã, Â £ 30,000. In the first year or operation of the Fraud Insurance Bureau, the use of data mining initiatives is subject to an insurance fraud network and leads to 74 arrests and returns on investment of five to one.
The Insurance Research Council estimates that in 1996, 21 to 36 percent of car insurance claims contained an element of suspicion of fraud. There are various schemes used to deceive car insurance providers. These ploys can be quite different in complexity and severity. Richard A. Derrig, research vice president for the Massachusetts Insurance Fraud Bureau, listed several ways car insurance fraud can occur, such as:
Multilevel collision
In a staged collision fraud, fraudsters use motor vehicles to carry out an accident with an innocent party. Typically, con artists carry four or five passengers. The driver made an unexpected maneuver, forcing an innocent party to collide with the swindler's vehicle. Each fraudster then files claims for injuries suffered in the vehicle. A "recruited" doctor diagnoses whiplash or other soft tissue injury that is difficult to debate later on.
Other examples include jumping in front of the car as it was done in Russia. Driving and road conditions are dangerous with many people trying to deceive the driver by jumping in front of a car that looks expensive or bumps into them. Hit and run are very common and famous insurance companies specialize in refusing claims. Two-way insurance is very expensive and almost unavailable for vehicles over the age of ten years - drivers can only get basic obligations. Because Russian courts do not like to use verbal claims, most people install dashboards to warn potential perpetrators or provide evidence for/against claims.
Excessive claims
True accidents can happen, but dishonest owners can take the opportunity to enter the entire range of minor damage previously to the vehicle to a garage bill associated with a real accident. Personal injuries can also be exaggerated, especially whiplash. The case of excessive claim insurance fraud may also include claims of damage to the car that are not caused by an accident to which the claim was made.
Example
Examples of soft auto-insurance frauds may include filing more than one claim for one injury, filing a claim for an injury unrelated to a car accident, an injury reporting error, or reporting a higher cost for car repairs than actually paid. Motor vehicle liability scams can include activities such as staging car crashes, filing claims when a plaintiff is not actually involved in an accident, filing a claim for unacceptable medical care, or creating an injury. Hard fraud can also occur when complainants mistakenly report their vehicle as stolen. Soft fraudulent accounts for most fake auto insurance claims.
Another example is that someone can illegally register their car to a location that will give them a cheaper insurance rate than where they actually live, sometimes called "rate avoidance". For example, some drivers in Brooklyn drive with Pennsylvania license plates because registering their car in rural Pennsylvania will be much cheaper than registering in Brooklyn. Another form of car insurance fraud, known as "fronting," involves registering someone other than the real primary driver of the car as the prime mover of the car. For example, parents may register themselves as prime movers of their children's vehicles to avoid the premium of young drivers.
The "Crash for cash" fraud may involve strangers who are unconscious and random, who are set to appear as the accused perpetrators. Such a technique is a classic rear-back shunt (the driver in front suddenly slams the brakes, maybe with brake lights disabled), guides dashboard (when following one car, one again pulling in front of him, causing it to brake sharply, then the first car slid off) or a helpful winter drizzle (the driver waved into queue lines by a crash scammer, then refused to wave).
Organized crime rings can also engage in car insurance scams, sometimes carrying out very complex schemes. An example of such a method is given by Ken Dornstein, author of Unintentionally, on Purpose: The Making of Personal Injury Below the World in America . In this scheme, known as "swoop-and-squat," one or more drivers in "swooping" the car forces an unsuspecting driver into his position behind the "squat" car. This squat car, which is usually filled with several passengers, then slows down suddenly, forcing the driver of the chosen car to collide with a squat car. Passengers in a squat car then make a claim to another driver's insurance company. These claims often include bills for unnecessary or unacceptable medical treatment.
An incident that occurred at Golden State Freeway June 17, 1992, brought public attention to the existence of an organized crime ring that launched a car accident for insurance fraud. This scheme generally consists of three different levels. At the top, there are professionals - doctors or lawyers who diagnose false injuries and/or make fraudulent claims and this gets the most from the benefits of fraud. Next is "capper (insurance fraud)" or "runner", an intermediary who gets the car to fall, cultivates the claims of the professionals above, and recruits the participants. Participants at the bottom of the scheme are desperate people (poor immigrants or others in need of cash quickly) who are paid about $ 1000 USD to place their bodies in the lane of cars and trucks, playing a kind of Russian roulette with their stay and the unsuspecting riders around them. According to the researchers, the settlers usually rent in their own ethnic group. What makes this chain of serial crimes difficult is how quickly they move to jurisdiction with lower enforcement, after a crackdown in a particular area. As a result, in the US several levels of police and insurance industry have worked together in forming task forces and sharing databases to track the history of claims.
In the UK, there is an increasing incidence of false whiplash claims to car insurance companies from motorists involved in small car accidents (eg, shunts). Because the mechanism of injury is not fully understood, A & amp; E doctors must rely on the patient's external symptoms (which are easily falsified). As a result, "do not win no fees" personal injury lawyers exploit this "loophole" to earn easy compensation money (often paying £ 2,500). In the end this has resulted in an increase in motor insurance premiums, which have a knock-on effect from the price of younger drivers off the road.
Property insurance
Possible motivations for this may include obtaining payments that are worth more than the value of the destroyed property, or to destroy and then receive payments for non-salable items. According to Alfred Manes, the majority of property insurance crimes involve burning. One reason is that any evidence that a fire is started by burning is often destroyed by the fire itself. According to the United States Fire Administration, in the United States there are about 31,000 fires caused by arson in 2006, resulting in a loss of $ 755 million.
Board compensation claims
Fraud involving claims from council insurers alleges that beatings would harm local authorities (mostly falling and traveling on board land) or inflating the value of the damage.
Detect insurance fraud
Detection of insurance fraud generally occurs in two steps. The first step is to identify suspicious claims that have a higher likelihood of becoming a cheater. This may be done by computer statistical analysis or by reference from the claimant or insurance agent. In addition, the public can provide tips to insurance companies, law enforcers, and other organizations related to the suspicion, observation, or other recognized insurance fraud committed by others. Regardless of the source, the next step is to refer this claim to the researcher for further analysis.
Due to the number of claims submitted each day, it would be too costly for an insurance company to have employees check for any claims for fraudulent symptoms. In contrast, many companies use computers and statistical analysis to identify suspicious claims for further investigation. There are two main types of statistical analysis tools used: supervised and unattended. In both cases, a suspicious claim is identified by comparing data about the claim to the expected value. The main difference between the two methods is how the expected value originates.
In a supervised method, the expected value is obtained by analyzing fraudulent and non-fraudulent claims records. According to Richard J. Bolton and David B. Hand, both from Imperial College in London, this method has some disadvantages because it requires absolute certainty that the claims analyzed are actually fraudulent or not deceptive, and therefore can only be used to detect the types scams that have been done and identified previously.
Unattended statistical detection methods, on the other hand, involve detecting abnormal claims. Claims and computer adjusters can also be trained to identify "red flags", or symptoms previously associated with fraudulent claims. Statistical detection does not prove that the claim is false; it only identifies suspicious claims that need to be investigated further.
Claim claims can be one of two types. They can either be excessive or "built" legal claims, or they can be false claims in which the claimed damage never really took place. Once the built claims are identified, the insurer usually tries to negotiate the claim to the appropriate amount. Suspicious claims may also be submitted to a "special investigation unit", or SIU, for further investigation. These units generally consist of experienced claims adjuster with specialized training in investigating fraudulent claims. These researchers look for specific symptoms associated with fraudulent claims, or look for evidence of counterfeiting. This evidence can then be used to refuse the payment of a claim or to sue the fraudster if the offense is serious enough.
After the fraud investigation departments of insurance companies are assigned to investigate fraudulent claims, they will often continue the investigation in two stages: pre-contact and post-contact. The first pre-contact phase involves the analysis of all available evidence before a suspect is contacted. This may involve reviewing proposed documents, reaching out to third parity, and gathering evidence from available sources. The second stage, "post-contact", involves starting a contact with a suspect to gather more information and, ideally, getting a burdensome statement. Investigators of insurance fraud are trained to question the suspect in a way that would preclude the possibility of a suspect raising a legitimate defense in the future. For example, a question about access to the claim form will preclude the defense that others fill out fake documents. Common defenses which may be prohibited by suspect interviews include, for example, that the suspect has no knowledge that his or her statement is false, has no intention of deceiving others, or makes ambiguous statements that are then interpreted incorrectly. Full disclosure may add credibility to the suspect account of the event, but the omission of disclosure or false statements may reduce the credibility of the suspect in the interview or subsequent process.
In the context of health insurance fraud, determining fraud committed by health insurance companies is also sometimes to be found by comparing income from premiums paid on expenses by health insurance companies on claims.
For example, in 2006 the Harris County Medical Society, in Texas, had a 22 percent increase in health insurance rates for "consumer-driven" health plans from Blue Cross and Blue Shield of Texas. This is despite the fact that during the previous year, Blue Cross paid only 9 percent of the premium money collected for claims.
Legislation
National and local governments, especially in the last half of the twentieth century, have recognized insurance fraud as a serious crime, and have made efforts to punish and prevent this practice. Some key developments are listed below:
United States
- Insurance fraud is specifically classified as a crime in all states, although state minorities only criminalize certain types (eg, Oregon only prohibits Workers' Compensation and Property Claim fraud).
- Coalition Against Insurance Scams was founded in 1993 to help fight insurance fraud. The organization collects information about insurance fraud, and is the only anti-fraud alliance that speaks to consumers, insurance companies, government agencies, and others. Through its unique work, the Coalition empowers consumers to fight back, helping counterfeit fighters detect these crimes better and deter more people from committing fraud. The Coalition supports this mission with large and growing practical tools: Information, research & amp; data, services, and insights as the primary voice of the anti-fraud community.
- About one-third of these investigations result in a criminal conviction, one-third result in denial of claim, and one third result in payment of claim. [48] ​​
- The 19 states require a compulsory insurance fraud scheme. This requires companies to set up programs to combat fraud and in some cases develop investigative units to detect fraud.
- 41 countries have fraud bureaus. This is a law enforcement agency in which "investigators review fraud reports and initiate prosecutions."
- Section 1347 of Title 18 of the United States Code states that anyone who attempts or operates a "scheme or intelligence" to "deceive a health benefit program" will be "fined under this title or imprisoned for no more than 10 years, or both. " If this scheme resulted in bodily injury, the offender could be jailed for up to 20 years, and if the scheme resulted in death, the offender could be jailed for life.
Source of the article : Wikipedia
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