Insurance fraud has existed ever since the beginning of insurance as a commercial enterprise. Fraudulent claims account for a significant portion of all claims received by insurers, and cost billions of dollars annually. Types of insurance fraud are very diverse, and occur in all areas of insurance. Insurance crimes also range in severity, from slightly exaggerating claims to deliberately causing accidents or damage. Fraudulent activities also affect the lives of innocent people, both directly through accidental or purposeful injury or damage, and indirectly as these crimes cause insurance premiums to be higher. Insurance fraud poses a very significant problem, and governments and other organizations are making efforts to deter such activities. There is a distinct need for more proactive and professional investigations due to the rising levels of fraud in our slumping economy.
Traditional internal controls have been ineffective in preventing fraud, and public education alone is not enough to reduce the escalating rates of insurance fraud. A more proactive and organized approach is necessary to effectively deter fraudsters and their negative effects on our economy.A key measure in such a proactive stance against insurance fraud is to create a centralized hub in which the public is encouraged to relay any first-hand information that they have. By creating a central point for information collection it is possible to optimize public awareness of fraud. All information needs to be relayed to the appropriate investigative units to eliminate the fraud at hand. It is important that insurance coalitions and the public work together in keeping the economy strong and free from the greed of those who attack the economy.
Insurance Fraud is not a victimless crime, we all pay the price for others’ greed; insurance fraud costs our economy billions of dollars annually, and results in increased premiums, higher taxes, and reduced benefits for all.
Due to the sheer number of claims submitted each day, it would be far too expensive for insurance companies to have employees check each claim for symptoms of fraud. Instead, 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 unsupervised. In both cases, suspicious claims are identified by comparing data about the claim to expected values. The main difference between the two methods is how the expected values are derived.
In a supervised method, expected values are obtained by analyzing records of both fraudulent and non-fraudulent claims. According to Richard J. Bolton and David B. Hand, both of Imperial College in London, this method has some drawbacks as it requires absolutely certainty that those claims analyzed are actually either fraudulent or non-fraudulent, and because it can only be used to detect types of fraud that have been committed and identified before.
Unsupervised methods of statistical detection, on the other hand, involve detecting claims that are abnormal. Both claims adjusters and computers can also be trained to identify “red flags,” or symptoms that in the past have often been associated with fraudulent claims. Statistical detection does not prove that claims are fraudulent; it merely identifies suspicious claims that need to be investigated further.
Fraudulent claims can be one of two types. They can be otherwise legitimate claims that are exaggerated or “built up,” or they can be false claims in which the damages claimed never actually occurred. Once a built up claim is identified, insurance companies usually try to negotiate the claim down to the appropriate amount. Suspicious claims can also be submitted to “special investigative units”, or SIUs, for further investigation. These units generally consist of experienced claims adjusters with special training in investigating fraudulent claims. These investigators look for certain symptoms associated with fraudulent claims, or otherwise look for evidence of falsification of some kind. This evidence can then be used to deny payment of the claims or to prosecute fraudsters if the violation is serious enough.In the past no standardized organization has been in place to effectively unite the nation against fraud, until now.
www.InsuranceFraud.com has been developed in order to restore the economy to order and eliminate those who make others lives’ harder through their greed and dishonesty.
If you have information on a fraud we can help you in bringing it to light.
