Definition of Insurance Fraud
Autor: papaigustavo • November 13, 2013 • Essay • 873 Words (4 Pages) • 1,367 Views
Presentation on Insurance Fraud
Definition of insurance fraud
Insurance fraud occurs when any act is taken with intention of fraudulently obtain some benefit or advantage to which they are not otherwise entitled.
False insurance claims are insurance claims filled with the intention to defraud the insurance provider.
Frauds in 2012
US: 51 Billion- increases between 33% to 38% price of premiums
India: 6.5 Billion- 12% Increase in Premiums
UK: 3.08 Billion- 5% increases in premiums
Causes.
The main motive of all insurance crimes is obviously profit. Insurance contacts provide opportunities both for the insured and for the insurer to commit frauds.
According to the Coalition Against Insurance Fraud the criminal uses holes in the law and in the contract to sate the greed. Criminal whom commit insurance fraud do it because consider it a low-risk criminal activity comparing to drug dealing and car robbery for instance. And the justice system also treats insurance frauds with fewer rigors than the crimes mentioned above. Insurance companies also pays suspicious claim because many times the legal costs can exceed the value of the claim.
Mismatch between the prices when the amount insured in greater than the actual price of the property insured can be a big incentive to frauds. This allows fraudsters to destroy the property and receive greater value for it.
Most common Fraud
The most common form of insurance fraud is inflating of loss.
Losses Due to insurance fraud
It is hard to determine the exact amount stolen through insurance frauds because fraudster to everything to hide evidences against them. Therefore the amount of frauds detected is much lower than the frauds committed.
The best that can be done is estimates the losses cause by frauds
Frauds in 2012
US: 51 Billion- increases between 33% to 38% price of premiums
India: 6.5 Billion- 12% Increase in Premiums
UK: 3.08 Billion- 5% increases in premiums
Opportunistic and premeditated fraud (Soft Fraud)
Soft fraud, which is far more common than hard fraud, is sometimes also referred to as opportunistic fraud. This type of fraud consists of policyholders exaggerating otherwise legitimate claims. For example, when involved
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