Insurance Fraud - Common Types

Insurance fraud is the second most common white-collar crime, behind tax evasion. One study reports that this type of crime costs Americans as a whole over $96 billion annually in premium increases alone. According to the insurance industries' statistics, averaged out over all fields, more than 10% of all insurance claims are fraudulent. While there are many various types of insurance fraud, ranging throughout the entire industry, there are a handful of fields that more commonly see fraud.

Health

This is, by far, the most common type of insurance fraud, and costs policy holders in the United States over $60 billion per year. There are two kinds of fraud in this industry: member and provider fraud. The former describes a policy holder withholding information from his or her provider. The latter refers to a health care worker or organization billing an insurance company for a service which was never provided. This may extend to and include over-billing, scheduling unnecessary appointments, and ordering unnecessary tests.

Automobile

This is currently one of the fastest-growing types of fraud, and one of the most common examples is staged accidents. Typically, an individual will purposefully cause a rear-end collision to collect from their auto coverage policy. Another type of vehicle coverage scamming occurs when claims of damage are inflated and exaggerated, in order to collect more money.

Life

According to The Coalition Against Insurance Fraud, life insurance fraud costs an average household $1650 per year and increases premiums by 25%. This type of sham occurs when a beneficiary attempts to collect on a life policy of a still living policy holder. Alternatively, life insurers can also be guilty of fraud. Sometimes too commonly, an agent will seeks to cancel an existing life coverage policy and replace it with a new policy that is paid for by the cash value of the previous policy. This practice allows agents to earn more commissions without having to seek new customers. Nearly all of the time, this costs the policy holder higher premiums.

Mr. Oliver is a marketing agent of Stamp Out Fraud. The Virginia Insurance Fraud Program provides help in eliminating insurance fraud throughout Virginia. For more information on their VA Insurance Fraud Program please visit their website