The Federal Bureau of Investigation has finally decided to put a stop to the insurance frauds, which are reportedly on the rise nowadays. The Insurance Information Institute has revealed that the US insurance industry pulls together a total of $1.1 trillion or more each year, in the form of premiums. A large chunk of it is gobbled up by the fraudsters, amounting to around $30 million.

The consequences

Well, since somebody has to provide for the extra costs. Who else than the naive consumers? They fall prey to the fraudsters and end up paying $200 to $300 more as insurance premiums each year.

Several insurance companies also take the fall for this reason, especially those working with limited resources. It is mainly because either they fail to pay for the excessive claims, or are robbed of their company assets.

Prevalent frauds

FBI has identified certain perimeters within which the fraudsters find the most comfort to operate. Consecutively, the initial investigation will be focused along particular schemes only, as mentioned below:

  1. The staged auto accidents and consecutive damage claims
  2. Frauds involving property insurance claims like for arson etc.
  3. Bodily injury frauds
  4. Frauds surrounding viatical life insurance settlements
  5. Diversion of consumer premiums and company assets
  6. Insurance frauds during the crisis period after natural disasters

The fraudsters

No particular line of professionals might be marked as fraudsters. Anyone related to the insurance industry, either directly or indirectly, might be involved in the scam process and you won’t even know. Frauds can be done by:

  1. The insurance policy holders who make false claims
  2. Insurance agents and brokers
  3. The executives working for insurance companies
  4. Medical professionals (charges for treatments which are either unnecessary or not even done)
  5. Attorneys (help to sidestep the anti-fraud measures of insurance companies) etc.

The line of investigation

Investigation for insurance frauds is not much different from other basic investigations. FBI simply follows the money trail to reach the fraudsters. Questioning victims, identifying witnesses and thorough review of the financial documents are all part of the process. Besides, checking for the identity thefts, and online scams often lead directly to the network of the fraudsters.

The defense

Every individual has to stay on his own guard, so that he/she won’t fall into such insurance scams. FBI suggests some measures so that you can defend yourself from insurance frauds, as mentioned below:

  1. Notices from the insurance company should never be ignored. – Even if your broker or agent advises you to not worry and promises to handle it for you.
  2. Always ask for a receipt, whenever you forward money to your insurance company.
  3. Never hand over your financial or insurance details to unknown individuals, even if he appears to be the most convincing and trustworthy guy on the planet.
  4. Don’t jump into buying insurance coverage on an impulse. Sign the documents, only after you’ve fully understood the policy clauses and benefits.
  5. Plan for your health care provider or attorney from beforehand. Don’t wait for a crisis situation to happen. Undue advices from strangers during mishaps and hasty decisions might lead you into a deceiving network of health-care providers or attorneys.
  6. Check the status of the insurance agents or companies before you sign a deal with them. Verify with the state’s department of insurance to ensure that they are properly registered or licensed to work in your state.

FBI has initiated its efforts to tighten the reins around insurance industry, and hopefully the future financial crimes will be restricted. Nevertheless, every individual should step cautiously into the insurance industry. As the saying goes, “Prevention is always better than cure”.

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