INSURANCE FRAUD

 

   A fraud is a deception designed to result into a financial or personal benefit. Insurers and their firms to an extend perpetrate a lot of fraud. This seems to be an institutional practice. The most common fraud is the rejection of valid Insurance damage claims. This goes on unnoticed because corporations make a lot of profit from legal activities, since the amount lost by individuals is insignificant.

   Both the Insurance company and the individual workers do a lot of Insurance fraud. This differs from adjusters, inspectors, and assessors who sometimes deliberately assist a policy holder to defraud their companies though they work for the company; a fraud to get financial benefits. So fraud in insurance companies is perpetrated both by the company itself, the workers and the policy holders.


FORMS OF INSURER FRAUD.

   Companies sometimes collect premiums without issuing coverage contracts. Where there are widespread losses, companies instruct their adjusters to be very conservative in assessing claims. Adjusters are persons who examine damages and how much to be paid for claims. When accidents occur, the client is stranded when he discovered that he was not covered after all the premiums. Here the fraudster Insurance agent simply give excuses or folds the shingles. So insurers fraud clients by not signing the Coverage contracts.


Another form of Insurance fraud is underpayments. Here the company colludes or agrees in secret with the inspectors and appraisers to give a false extend of the damage usually lower than the actual. Inspectors and Appraisers are charged with finding out the value of something. Their low appraisal eventually lowers the cost to be paid by the Insurance Company. This has always brought about arguments between the claimant and the Insurance provider. To solve this the company will bring in another set of inspectors and assessors believed to be more careful, yet still fraudulent. Either they are deliberately conservative ( low) or collude for personal gains.


   Another form of Insurance fraud is selling Insurance coverages with unclear terms or with difficult conditions for a policy holder to fulfill before benefitting from a legitimate claim. Yet this fraud is considered legitimate because the legal system has not been clear on how it handles such claims. Sometimes depending on the prevailing political climate and the facts submitted, the case is either always dismissed as a customer idiocy or punished as an act of fraud.


There are also marketing frauds like churning, sliding and twisting. Herein, encouraging frequent illegal turnovers to gain commissions or cheating deliberately is common.


CONCLUSION

   Fraud losses like other crimes is never easily calculated. This is because what is calculated is what is seen, but the real value is always morethan what is calculated. As a result of the fraud network, about 10% of all Insurance payments are reportedly fraudulent. The burden is always carried by the client who pays the premium.

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