Insurance Fraud is Driving Up Premiums

by Staff Writer

Insurance policies usually renew annually, and that is when consumers notice that their insurance premiums have gone up. There are legitimate reasons for raising insurance premiums. For example, if it was an especially bad year for hurricanes, then there will be a significant increase in homeowners, auto and health insurance claims. To help recover the unexpected spike in payouts, the insurance companies will raise their premiums.

But a significant percentage of a premium increase is to help cover losses due to insurance fraud. In the United States, insurance fraud ccunts for approximately $30 billion in lost revenue for the insurance industry. Unfortunately for the consumer, that money has to come from somewhere, which is part of the reason for insurance premium increases.

Consumers can help their own causes by becoming familiar with insurance fraud and learning how to report it. Stopping insurance fraud can lead to lower insurance premiums, which affects every consumer directly. There are several kinds of fraud to look for and many different ways to report it.

Auto Insurance

One of the more prominent types of insurance fraud is auto insurance fraud. An elaborate, but popular, type of insurance fraud is the fake accident claim. Groups of criminals get together to stage what looks like a real automobile accident, but everyone involved is a paid participant. The drivers, witnesses, tow truck drivers and even insurance claims adjusters are all part of the scheme.

These rings of criminals can be difficult to stop because it can take years for patterns of claims involving the same people to become suspicious. In most cases, by the time the insurance companies have figured out what is going on, the ring of criminals has moved on to a new scam.

Another common form of auto insurance fraud is vehicle theft. The vehicle owner sells his vehicle to an auto body shop that wants to sell the vehicle for parts, and then the vehicle is reported stolen. A police report is filed and the vehicle owner is allowed to collect an insurance check to go along with the proceeds he received from the sale of the vehicle. This is illegal and a major component to auto insurance fraud.

Health Insurance

The more common forms of health insurance fraud happen without the patient even knowing. Health insurance fraud can come in the form of doctors who overcharge the insurance company for procedures, order unnecessary tests for the patient and then billing the insurance company or just billing the company for procedures and tests that never happened.

People want to be able to trust their physicians and local hospitals. But millions of dollars a year in health insurance fraud are being carried out in the name of unsuspecting patients. This is one of the elements that works to keep health insurance costs so high in the United States.

Homeowners Insurance

Some forms of homeowners insurance fraud are more subtle than others. If an area has been hit by a large storm, then there is usually wide-spread damage. Insurance companies can sometimes find themselves short-handed with field adjusters and will start approving claims without having the damage checked by an adjuster. Some criminals are aware of this practice and will take advantage of over-worked insurance companies during times of crisis.

Arson is also a form of homeowners insurance fraud that costs insurance companies millions of dollars a year. Homeowners will remove their more expensive items and make sure everyone is safely out of the home before setting it on fire. The homeowner collects his check and builds a new home. Landlords that own empty homes will also use arson as a way to pay off the mortgage and make a profit on their property.

Life Insurance

Life insurance offers an invaluable service to the insured and his family. But it can also be the source of fraud for many people. One of the groups hit hardest by life insurance fraud is senior citizens.

People disguised as life insurance sales people will go out and offer bogus life insurance policies to seniors who thought that they may not qualify for life insurance. The seniors see a chance to take care of their families when they pass away, but the whole thing is a fraud. Seniors pay their premiums every month towards insurance policies that do not exist.

Reporting Insurance Fraud

Consumers need to be vigilant and report insurance fraud whenever they see it. If you see the same people getting in auto accidents in your community, then that could be insurance fraud. If your elderly parents show you a new life insurance policy they just purchased that seems suspicious, then that could also be insurance fraud.

One of the reasons that people do not report insurance fraud is because they do not know what insurance company should get the report. Every state in the country has its own insurance regulation department that governs all of the activity of insurance companies for that state. If you see insurance fraud, then you can call your state insurance regulation department by getting the number from the government directory in your phone book. Each state insurance department also has an Internet page that can be easily accessed through an Internet search.

The National Insurance Crime Bureau is an independent bureau of investigators that can help you report insurance fraud anywhere in the United States. You can call the NICB at 1-800-424-9121, or visit the NICB website for more information.

When you report insurance fraud, you will need to have as much information as possible about the incident. When you witness insurance fraud you need to write down as many details as you can including the names and addresses of the parties involved, the exact details of the fraud, insurance companies involved and any other pertinent information you have.

Whenever you see insurance fraud, you need to report it immediately. Any information you can give will be valuable in stopping this crime that costs American consumers billions of dollars every year.


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