How to Detect Insurance Fraud
Insurance fraud is much more prevalent than most people think, and it costs everyone more in the form of higher premiums. But insurance companies are well armed to fight the battle of insurance fraud. Here are some of the ways they detect bogus claims.
They look at a person’s claims record.
If someone has submitted several claims or the claims are for a great deal of money, this raises suspicions among insurance firms. They are especially on guard for this kind of crime with homeowners and auto insurance. A common fraudulent claim made by many people is a stolen automobile.
Insurance companies also look for patterns in the claims that people make – how often they make them and what they are for. Companies maintain extensive records of claims made and analyze them to look for trends.
They look for red flags within a claim.
If someone is submitting a claim for a huge loss but doesn’t seem all that upset about it, insurers are wary. Another claim that raises doubts is one that has handwritten receipts for repairs. Yet another suspicious circumstance is when someone submits a claim for homeowners or auto insurance shortly after increasing their coverage.
Insurance firms employ investigators who look into a claimant’s background if there is reason to doubt the person’s veracity. They will, for example, look for any criminal records, interview witnesses and examine relevant locations. And, yes, there are times when an insurance investigator may observe a claimant.
Doing cross checks.
This is a simple procedure where companies will look for patterns in the payment checks they send out. For example, they would be alert if they saw one person receiving a lot of checks, or if payments for a few large claims were going to the same address, even though the names on the checks were different.
They look at social media.
Insurance investigators will look at a person’s Facebook profile if they think the person is committing fraud. The person may brag about their subterfuge on the site.
They use computer technology for suspicious billing patterns.
This comes into play more often for things like medical claims. Physicians or clinics may commit fraud by billing insurance companies for services they never performed, or they may inflate the cost for certain procedures, or even bill more than once for the same service.
Insurance companies now use computer programs that are able to spot these types of patterns.
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