While insurance has become an indispensable necessity in today’s times, it cannot protect you from insurance scams. No matter what type of insurance you own, you have to beware of fraudsters trying to disrupt the process or making a similar error yourself. This article will help you prevent insurance fraud and dodge a bullet.What is insurance fraud?
To safeguard yourself, you first need to understand insurance frauds meaning. The term refers to fraudulent activities that plague the insurance sector and are committed by and towards insurance companies. Such fraud is committed in various branches of the insurance industry, from health insurance to motor insurance and others.
Technically, insurance fraud is defined as an act committed to defraud the insurance process. Fraud occurs when a claimant attempts to procure a benefit or advantage that they are not legally entitled to or when an insurer tries to knowingly deny claimants benefits that are due. The primary elements of fraud are that it:
- Is deliberate,
- Involves financial gain,
- Is committed under false pretences,
- And is illegal.
Broadly speaking, hard fraud occurs when an individual deliberately plans or creates a loss, for instance, theft or arson against an asset covered by insurance. On the other hand, soft frauds are opportunistic frauds that consist of policyholders exaggerating legitimate claims. Insurance crimes are committed by people from all walks of life and are becoming an alarming concern.What are the types of insurance fraud?
As per the Insurance Regulatory and Development Authority of India, the apex body overseeing insurance in the country, there are three broad categories of fraud:
Policyholder/Claims Fraud: This type of fraud is committed against the insurance company during an insurance product’s purchase and/or execution. It includes frauds initiated at the time of making insurance claims. For instance, falsifying a pre–policy report to hide pre–existing diseases while purchasing health insurance comes under this category.
Intermediary Fraud: This is a fraud that is perpetrated by insurance agents, corporate agents, third party administrators, and intermediaries against either the insurance company or policyholders, or both.
Internal Fraud: When fraud is committed against an insurance company by its Director, Manager, and/or other staff members or officers, it is considered internal fraud.
To ensure that you do not end up committing insurance fraud, be mindful of these points:
Do not fabricate documents to meet the terms and conditions associated with insurance to avoid paying higher premiums.
Never submit forged or inflated bills.
It is your responsibility to inform insurers if you hold other policies. You cannot use multiple insurance companies paying claims as a way to earn profit.
Refrain from participating in fraud rings wherein you form a coalition against insurance companies to make false claims.
Lastly, do not fake an accident to collect compensation for medical expenses, as it is fraudulent behaviour.
Now that you know more about insurance fraud stay alert and on the right side of the law. We hope that this has been an informative read for you today. For more details on how to avoid insurance fraud, do reach out to your insurance provider or agent who can help you with answers to your concerns.
Disclaimer: The above information is indicative in nature. For more details on the risk factor, terms and conditions, please refer to the Sales Brochure and Policy Wordings carefully before concluding a sale.