By Ade Fashola
People ask me why insurance companies cannot pay claims as they arrive and my number one answer amongst others is fraud. Insurance fraud has and continues to make an impact on society in a harmful way. There are many insurance frauds schemes that might involve either the insurer, insured, or third party. Insurance fraud can happen in any line of insurance business be it property insurance, life insurance, worker’s compensation, health care, and so on. The major ill of insurance fraud is that it has an impact on society in general because insurance fraud can be used to fund criminal activity. Insurance fraud is not a victimless or insignificant crime. The vast majority of honest customers end up paying for the dishonesty of the few through higher insurance premiums
Possibilities of fraud makes the insurer to be cautious especially when they see a red flag.
What are the Red Flags?
Red flags of insurance fraud might include any of the following:
• The claim is made shortly after the inception of the policy, or after an increase or change in the coverage under which the claim is made. The insured has a history of many insurance claims and losses. Before the incident, the insured asked the insurance agent hypothetical questions about coverage in the event of a loss similar to the actual claim. The insured is very insistent about a fast settlement, and exhibits more than the usual amount of knowledge about insurance coverage and claims procedures, particularly if the claim is not well documented. The claim includes large, bulky property that is unusual for a burglary.
• In a theft or fire loss claim, the claim includes a lot of recently purchased, expensive property, or the insured insists that everything was the best or the most expensive model, especially if the insured cannot provide receipts, owner’s manuals, or other documentary proof of purchase. Property considered personal or sentimental to the insured and that someone would expect to see among the lost property (e.g., photographs, family heirlooms, or pets) is conspicuous by its absence. The insured cannot remember, or does not know, where the claimed property was acquired, especially unusual items, or cannot provide adequate descriptions.
• Documentation provided by the insured is irregular or questionable, such as: Numbered receipts are from the same store and dated differently or sequentially. Documents show signs of alteration in dates, descriptions, or amounts. Photocopies of documents are provided, and the insured cannot produce the originals. Handwriting or signatures are similar on different receipts, invoices, gift verifications, or appraisals.
• In a theft or loss away from home, the insured waits an unusually long time before reporting the theft to the police. The insured can give the police a complete list of lost property on the day of the burglary or shortly after. The amount of the claim differs from the value given by the insured to the police.
• In a burglary loss, there is no physical evidence of breaking and entering, or a burglary could not have occurred unnoticed under the circumstances.
• In a fire loss: The apparent cause and origin of the fire is inconsistent with an accidental cause and origin, or there is evidence of the use of an accelerant. The remains of the property do not match the claimed property. The premises do not show signs of having contained the claimed property, or the amount of property would not fit into the space where the insured says it was. The insured has discarded the claimed damaged property before the adjuster can examine it. The insured refuses or is unable to answer routine questions.
• Information on a life insurance application is very vague or ambiguous as to the details of health history, such as dates, places of treatment, names of physicians or hospitals, or specific diagnoses. A death claim is presented in which the death has taken place outside of the country. A contestable death claim is reported as an accidental death, but could possibly be a suicide (such as a fatal accident involving only one vehicle, a hunting accident, or an accidental shooting while cleaning or repairing a weapon). An autopsy report discloses a different height and weight than what is shown on the recent application (auto or house fire death). Dental records do not match the dental findings in the autopsy report. Records are missing on a patient who was confined to a hospital, or a patient’s medical records are missing from the physician’s office. The routine audit of a designated insured group shows a significant increase in employees whose names do not show up on the payroll. Series of prescription numbers from the same drug store don’t coincide chronologically with the dates of the prescriptions. An automobile was destroyed by a fire in a remote rural area with no witnesses; the driver claims an electrical shortage in the engine compartment caused the fire.
• Preliminary information for a business or home fire loss indicates considerable financial difficulties and financial pressures being brought upon the owner, and the fire is suspicious in nature and origin.
There is no indication of indentation in the piling of the carpet where heavy items of furniture or equipment were to have been placed. There are no hooks or nails on the walls where valuable pictures might have been hung. Entrances or exits are too small to remove a large item without disassembling it. A claim contains false statements or it has been determined that there has been a deliberate cover up . There are more passenger claims filed than there were passengers at the time of a public transportation accident. An official document of findings conflicts with the facts in the case, and there is no explanation for this conflict. Photographs or other documents do not substantiate the reported findings.
These and others are some of the reasons why insurers usually look deeper to enable them ascertain the truth. Most of the time, some of the claims with any of these kinds of alerts come back to be fraudulent though not in all cases.
