Most insurance professionals believe that about 10% of all insurance claims are fraudulent insurance claims. Unsurprisingly, this number had nearly doubled with the COVID-19 pandemic, with experts estimating that about 18% of the claims have an element of fraud. As a result of workplace adjustments amidst the pandemic, an increased workload, and fewer inspections, insurance fraud has increased. Insurance fraud targets both individuals and companies.
Fraudulent Insurance Claims on the Rise: Auto Claims
Insurance companies are facing an increased number of fraudulent auto claims. For example, these claims could include:
- Faking auto accidents to place an insurance claim against the other driver
- Inflated billing for auto repairs
- “Jump-ins,” where people who were not in an accident file injury claims, hoping to get a settlement from the other driver’s liability car insurance
- “Give-ups,” where the claimant fakes theft or damage of his or her car to claim a settlement from the insurance company
- Organized auto schemes where organized crime rings will launch “whiplash” claims to test the insurer’s anti-fraud mechanisms
Unemployment Insurance Fraud
Different state governments offered unemployment insurance to help people hardest hit by the pandemic. However, criminals have seen this as a chance to benefit from the unemployment benefits.
For example, in one case, two defendants submitted several fraudulent unemployment insurance claims. They used the name, dates of birth, and social security numbers of prison inmates to do so.
Some common insurance fraud schemes that are on the rise include:
- Fictitious employer-employee fraud
In fictitious employer-employee fraud, the claimant falsely indicates that he or she works for a legitimate or fictitious company. Then, he or she supplies fictitious wage records to receive benefits.
- Employer-employee Collusion Fraud
In this scheme, the employer pays the employee reduced and unreported wages. Subsequently, the employee applies for unemployment benefits.
- Misrepresentation of Income Fraud
In this fraud, the claimants continue to receive unemployment benefits even after they have returned to work and fails to report their income. Alternatively, claimants could report higher wages than they earned to attract higher unemployment benefits.
- Insider Fraud
Insider fraud involves government employees using their credentials and positions to approve unqualified claimants and improper amounts to the wrong people.
- Identity-Related Unemployment Insurance Fraud
In this type of unemployment insurance fraud, the claimant uses stolen identities or information to apply for employment benefits.
Common indicators of insurance fraud
Some of the signs that you could be dealing with a fraudulent insurance claim include:
- The claimant has a long history of claims
- The claim has suspicious loss indicators. These could include handwritten receipts for the claim, or the claimants increasing their insurance coverage shortly before the claim. Alternatively, they might include a medical claim submitted by a temporary employee whose job is ending, or a fire damage claim that comes shortly after a family argument.
- Numerous claims from the same healthcare provider for accident victims who typically receive the same treatment
Final Thoughts
The pandemic has created confusion. Consequently, criminals are looking for ways to file false and fraudulent claims to benefit from the pandemic-related confusion. Therefore, RKN Global notes how important it is to stay vigilant for signs of fraud.
