Jennifer Mellon | Investigating Insurance Fraud
Top 3 Methods of Insurance Fraud
Insurance fraud can either benefit the insurer or the insured, depending on who instigated the fraudulent claims. Unfortunately, the innocent victims of either one are the public as they are generally charged with higher premiums, says Jennifer Mellon. Basically, higher premiums are charged to cover the insurer’s losses which in the personal opinion of Jennifer Mellon, is rather unfair. But, setting personal opinions aside, insurance fraud is a costly crime that can cause annual losses of up to billions of dollars.
There are various methods of insurance fraud, but in general, these take on the form of false insurance claims and either the insurance company or the insured pockets the money. For the reader’s reference, below are three of the most common methods of insurance fraud:
1. Exaggerated or non-existent injuries
According to the National Health Care Anti-Fraud Association, insurance fraud accounts for roughly about 3% of the total expenditures of the country’s healthcare industry, which is estimated to cost said industry $51 billion in losses annually. But this is just a conservative estimate, shares Jennifer Mellon; because according to other reports, total losses are at 10% of the industry’s annual expenditures, which translates to about $115 billion per year. Image Source RockyMountainTrainingInstitution
How is insurance fraud committed? The insured or their family can either exaggerate the policy holder’s medical condition or injury, or they can file a claim for a completely fabricated medical condition which they know to be covered in the policy.
In the case of insurance companies, fraud is committed by underpaying physicians and hospitals, denying coverage, and removing records from their system.
2. Faking one’s death
There have been numerous cases of faking one’s own death to receive the benefits from their life insurance. Sometimes, the insured’s family or loved one is involved in the whole scheme, but at other times, it’s mainly just the insured. How is insurance claimed? Jennifer Mellon shares that it’s an elaborate scheme that could involve assuming a new identity and forgery to get the benefits. The perpetrator then could live in another country under the new assumed identity. Sometimes, the insured would also fake their own death to “take care of the family” to claim their life insurance.
3. Falsifying car insurance claims
In general, fraudulent claims against car insurance providers are made by the repair shop and/or the insured. With the repair shop, they could exaggerate the repairs that need to be done, or they could file legitimate claims but use sub-par replacements that cost less. They then keep the extra cash from the insurance.
For the insured, they could deliberately damage covered parts to have these replaced, or they could exaggerate the damage and include minor repairs from previous damages into the bill so the insurance company will also cover them, unknown to them of course, says Jennifer Mellon.
If you wish to learn more about Trustify’s fraud investigations, Jennifer Mellon invites you to give them a call at (877) 415-7515.
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