As insurance fraud continues to rise, many companies are looking at an anti fraud policy for insurance. While you may think that anti fraud programs are just a way for insurance companies to make a higher profit, it's actually done for your benefit as well. Fraud is an expense, and by lowering expenses, companies are able to lower premiums. In such a competitive marketplace, the companies that can keep fraud to a minimum have an advantage. Let's look at ways that insurance companies battle fraud.
Anti Fraud Policy for Insurance: Monitoring Policyholders
Since it is policyholders (and those making claims against a policyholder's insurance company) that commit most of the fraud, it makes sense to focus on them. There are several ways that companies do this.
You won't hear the term "risk flag" when you are on the phone with your insurance company. However, the claims department will likely use that term, or something similar, quite often. A risk flag is activities, statements, or just reasonable suspicion that fraud may be taking place. When you call to report your claim, the person on the phone is listening for clues that might lead him or her to raise the flag.
Computer programs do a lot of the anti fraud work for insurance companies. They are able to sift through more data than the people in the claims office can handle. This helps the insurance copy spot trends or patterns that would otherwise go unnoticed.
The risk flags and the computer data searching all typically feed into one department as most insurance companies: the SIU department. That stands for Special Investigations Unit. While Hollywood will probably never make a TV show about their jobs, it's actually quite similar to detective work.
When suspicions are raised, the SIU team will begin to monitor the claim. Sometimes they take over immediately, while other times they will investigate after the fact -- sometimes even after a claim has been paid.
If you have ever reported your car stolen, there is a good chance that someone from SIU has called or visited to "ask some questions." This can make you feel like a criminal even though you are not. Realize that this is just standard practice for some claims and is done to help lower fraud.
Here are some examples of what SIU members do:
- Visit the scene of an accident or fire
- Talk to all the people involved in the claim
- Search for witnesses
- Run background and other computer checks
- Obtain financial or medical records
Many people on the SIU team are former detectives or police officers, but experienced claims professionals may also be hired.
The first line of defense against fraud is actually all of the non-SIU employees because they see the claims before they get routed to SIU. To help employees spot false claims, many companies are conducting training classes or computer-based training. Employees learn what fraud is, signs of fraud, and what questions to ask when they suspect there is fraud.
Sometimes it is the insurance company employees that conduct the fraud, or conspire with the policyholders. These investigations are usually handled by SIU or an outside company.
If a claims person, or someone who files a claim on your behalf, such as a doctor, ever suggests that an "arrangement" can be made--don't accept. This is insurance fraud and if you are found out, there will consequences.
Examples of Insurance Fraud
Most people know what insurance fraud is, but a review is still helpful. Some fraud is nearly so common that people forget it is fraud.
- Padding your claim. This can be in the form of claiming you lost (or had stolen) something that you never owned, or misrepresenting the value of an item that you do own.
- False claim. Reporting that your car has been stolen when you really hid it in the woods is a good example.
- Lying on your application. Even though you may never file a claim, lying on your application for insurance is still fraud.
- Forgery or Falsifying of documents. This can range from trying to adjust the dollar value of a receipt to padding your meal expense account.
Insurance fraud costs insurance companies billions of dollars each year, which get passed on to you through higher insurance premiums. If you are considering conducting fraud yourself, know that the anti fraud policy for insurance companies is extensive and helps them to find out about your illegal activities. And if you spot, or know of insurance fraud that someone else is committing, do the right thing and report it.