Fraud is not something that many people understand
The insurance industry has to deal with a wide range of financial risks that often result in losses. One of the most things that insurers have to fight on a constant basis, but something that receives relatively little attention from consumers, is fraud. Insurance fraud is a longstanding problem that has no simple solution. Many people do not realize that fraud is not something that insurance companies suffer from alone. Fraud has a major impact on the finances of policyholders as well.
According to the Coalition Against Insurance Fraud, some $80 billion in fraudulent claims are filed every year in the United States alone across the entirety of the insurance industry. In many cases, fraudulent claims are rejected after investigation by the insurer receiving the claim. Enough of these claims are approved to make them a seriously costly problem, however. The auto insurance and workers compensation sectors are home to some of the highest degrees of fraudulent activity in the industry.
_________________________Random Quotes to Remember ~ “The best investment is in the tools of one’s own trade.” – Benjamin Franklin
Insurers are not the only ones that suffer from insurance fraud
Insurance fraud affects consumers in many ways. When it comes to auto insurance, staged accidents can leave people with serious, life-threatening injuries. A staged accident can easily turn into something much more serious that results in loss of life. In the health insurance sector, those parading themselves as insurance brokers can take advantage of those in precarious financial situations. In the wake of a natural disaster, those posing as recovery workers can take advantage of those with homeowners insurance policies, offering to do illegal repairs on a property in order to acquire funds from an insurance company.
Every instance of successful fraud leads to a financial loss for an insurance company. What this means for policyholders is higher premiums. When an insurer incurs a loss, they have to find a way to recover from this loss. Raising rates on the coverage that they provide is typically the best solution. Fraud is not something that insurance companies have to overcome alone, especially when it comes to the financial aspects of this crime.