10 Ways Insurance Firms Identify Claim Scams
August 29, 2013
Insurance l claim scams are such a major problem in South Africa that the insurance companies have special “security branches” to weed out criminals who try to game the system. Rip-off artists operate and then make false claims, costing insurance firms billions of rands and sending premiums through the roof.
In the past fraudsters perpetuated mainly “old style” claim scams, such as pretending to lose a valuable object and then claiming for it, or staging accidents. For instance a motorist will suddenly hit the brakes hoping that someone goes into him so he can fake an injury. Or someone will create fake vehicle registration or a receipt for a non-existent valuable item, such as a painting or a collectible car, report it stolen and collect the money.
But in these harsh economic times, claim scams are getting more sophisticated. So are the methods by which insurance firms identify possible fraud. Here’s how the investigators weed out the fraudsters.
How Insurance Companies Identify Claim Scams
- A basic cross-check is the first step investigators take when sniffing out a scam. They simply look for a pattern in payments. If the same person is getting lots of payouts that’s a warning sign. In the same way if a lot of payments are going to the same address or bank account, even if the names are different, that is another indicator of possible fraud. Law enforcers capture a large percentage of fraudsters in this way.
- If you have submitted a lot of claims in your lifetime you are immediately under suspicion. This applies particularly to home owner’s insurance and car insurance. An amazing number of scamsters report their cars missing when they aren’t. Using computers, investigators also look for patterns in claims to identify insurance scams.
- Insurance investigators have a list of “suspicious loss indicators” that can lead them to a bogus claim. If a claimant is calm and unflustered after submitting a claim, for example, or if he submits handwritten receipts for the item covered, or if he increases his insurance cover just before submitting acclaim, or if there was a fire following a family argument, or if someone submits a claim just after being retrenched – these are all strong indicators of fraud.
- If there is the least suspicion of a fraudulent claim, investigators do in-depth investigations of the claimant’s life by looking at criminal records, credit record, interviewing claimants, investigating relevant sites and even shadowing the claimant to find out any suspicious or incongruous behavior.
- A new addition to insurance fraud in South Africa involves claims arising from real or fake injuries incurred in car crashes. Say you have back pain following a car accident. You go to the chiropractor who submits an inflated bill to the insurer for non-existent injuries. It’s the chiropractor who is at fault here but law enforcement could drag the claimant into the scam. And, yes, sometimes scammers like this try to get the accident victim to participate in the fraud. Also there are lawyers who put in exorbitant claims for car accident victims.
- With medical claims there is often billing fraud on the part of physicians and clinics. They charge for fictitious goods and procedures. This kind of scam is on the rise in South Africa, resulting in nearly unaffordable medical aid premiums. Investigators examine just about every medical claim made to try and curb such fraud.
- Car repair frauds are rife too. Car owners try to get the panelbeaters to quote on more than the actual damage incurred. Or they ask the panelbeater to add the excess amount to the bill. Sadly, most panelbeaters are willing to comply. And car repair businesses are adept at other kinds of fraud, such as using a reconditioned part and charging for a new one. Investigators have developed ways of identifying this kind of scam.
- The investigation units of insurance companies are forensic specialists. In cases of fire claims there are specialists who can determine scientifically if a fire was arson or was an accident, determine if a claimant’s injuries mach the accident, examine vehicles to see if the damage was actually the result of an accident, and conduct financial reviews on homeowners. Claimants who are behind on mortgage or car payments are fraud risks.
- A lot of claim scams involve the insurance companies’ own personnel. Adjusters might take a cut. Agents commit fraud by stealing customers’ car insurance or life insurance premiums. The agents just pocket the money and the insurance policy is never purchased. Insurance firms are very strict about who they hire. Applications from those with a bad credit record or financial problems are flagged as more likely to commit fraud.
- Fraud investigators are even turning to the social media to identify insurance scams. There is the famous case of the supposedly bed-ridden claimant who posted a video on YouTube showing herself dancing the night away. People give away a lot on Facebook and Twitter.
WHAT YOU CAN DO
If you are freaked out by this level of fraud, you can take steps to help the situation by doing the following: check the bills for medical services, car repairs, etc. to make sure they are accurate, call the police if you have a bumper bashing or get witnesses to see what has happened, and beware of lawyers and doctors who try to push you into making a personal injury claim. They could be in cahoots with others.
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All info was correct at time of publishing