BIFRANCHISE
| Joined: | 2009-02-16 |
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Insurance Fraud is the intentional misrepresentation of material facts, knowingly made, and with intent to defraud an insurance company. The definition means that someone knowingly misrepresented certain facts associated with an insurance transaction whether it related to an insurance application or later during a subsequent claims investigation. The result of the 'misrepresentation' was that an insurance carrier bound coverage or paid a claim that it would not have normally done had the person provided accurate information. There are several types of Insurance Fraud, such as:
1. Agent/Broker Fraud:
a. Cash, Loan, and Dividend Checks – requesting without the knowledge of an insured or contract holder cash, a loan, or a dividend check and cashing the same
b. Settlement Checks – misdirecting and cashing settlement checks
c. Orphan Contract Holder – a policyholder or contract holder who has not been assigned to a servicing agent or the whereabouts of this individual is unknown.
d. Premium Fraud – collecting the premiums without remitting the checks to the insurance company.
e. Fictitious Payees – changing the beneficiary of record to a fictitious person and subsequently submitting the necessary papers to authorize the issuance of a check.
f. Fictitious Death Claims – obtaining a fictitious death certificate and requesting that a death claim check be issued.
2. Underwriting Irregularities:
a. Misrepresentation – making a false statement with the intent to deceive the prospective insured persons in order to knowingly obtain an unlawful gain.
b. False Information – submitting false information to obtain unlawful financial gain.
c. Fictitious Policies – submitting fictitious policies to improve one’s writing record or prior to leaving the company writing fictitious policies called “tombstone cases” to improve one’s commission pool so that his compensation will be greater. Tombstone means an agent literally takes names from tombstones in a cemetery and writes new policies.
d. Surety and Performance Bond Schemes – issuing worthless bonds to the insured for high-risk coverage in hopes that a claim is never made. If a claim is made, the agent might pay it off from agency funds, delay the payment, or skip town.
e. Sliding – including additional coverage/s in the insurance policy without the knowledge of the insured. The extra charges are hidden in the total premium and since the insured is unaware of the coverage, few claims are ever filed.
f. Twisting – replacing the existing policies for new ones using high pressure sales techniques.
g. Churning – falsely advising customers to buy additional insurance for nothing by using built-up value in their current policies.
3. Vehicle Insurance Schemes:
a. Ditching (a.k.a. “owner give-ups”) – getting rid of a vehicle to cash in on an insurance policy or to settle an outstanding loan.
b. Past Posting – after being involved in an automobile accident without having an insurance, getting the insurance and reporting the vehicle as being in an accident and collecting for the damages.
c. Vehicle Repair – billing for the new parts on a vehicle but using second-hand parts.
d. Vehicle Smuggling – purchasing new vehicle with maximum financing, insuring that same vehicle, selling and shipping it to a foreign port, reporting it stolen, and collecting the insurance.
e. Phantom Vehicles – collecting on a vehicle simply by presenting the certificate of title that shows the legal ownership of a vehicle without any other proof that a vehicle exists.
f. Staged Accidents – organizing an accident to occur on a vehicle. The schemes are organized by rings and the culprits move from one area to another. They often use the same vehicle over and over which sometimes causes their scheme to be uncovered.
g. Two Vehicle Accident – causing an accident and then leading the innocent driver to believe it was his fault.
h. Three or More Vehicle Accident – setting up an accident in which all the drivers are involved.
i. Other Staged Accidents – colliding without being observed, then driving to a road or highway and arranging so that the accident appears to have occurred there.
4. Life Insurance Schemes:
a. Fraudulent Death Claims – obtaining reimbursement for life insurance using phony death certificates.
b. Murder for Profit – killing (or arranging for the killing) of a person in order to collect the insurance.
5. Liability Schemes – claiming an injury that did not occur. The slip and fall scam is the most common, where a person claims to fall as the result of negligence on behalf of the insured.
6. Workers Compensation Fraud:
a. Premium Fraud – misrepresenting information to the insurer by employers to lower the cost of workers compensation premiums.
b. Agent Fraud:
• issuing certificates of coverage indicating the customer is insured, but never forwarding the premium to the insurance company
• altering the application for coverage completed by the employer in order to be able to offer a lower premium to his client
• improperly advising the employer as to how to complete the application
• advising the employer to transfer a group of employees into a lower risk classification to avoid the experience modifier premium rate
c. Claimant Fraud – misrepresenting the circumstances of any injury or fabricating that an injury occurred such as staging an accident and fabricating an injury, or actually having an accident and then exaggerating the injury.
d. Organized Fraud schemes are composed of the united efforts of:
• lawyer – usually the organizer of the scheme and the one who will profit the most because the majority of workers compensation cases are accepted on a contingency fee basis
• capper (a.k.a. runner) – recruiting patients for the scheme. He may be employed by either the attorney or doctor and is paid, either on a percentage of the total take or on a per person basis, for bringing in patients
• doctor – may be one of the organizers or a player in the scheme, but must be a part of it in order for it to work properly. The doctor is used to lend authenticity to the scheme, and he is well compensated for his efforts. The doctor bills for services that he may or may not render as well as for unnecessary services. In addition, if the patient has regular health insurance, the doctor may double bill for the services. If the injury incurred as the result of an automobile accident while the patient was on the job, the doctor may bill all three insurance companies: the workers compensation carrier, the employee’s health insurance, and the automobile carrier
• claimant – helps the above-mentioned persons (lawyer, runner, and doctor) by playing his part in the scheme
7. Arson – an act of deliberately setting fire to a building, car or other property for fraudulent or malicious purposes. Great strides have been made in fighting arson over the past two decades. Church arson is classified as a federal crime and a coalition of federal agencies are allied against church arson. More fire fighters and police officers have basic training in arson detection. Insurers have set up a computerized database of property claims to help identify suspicious fires and insurance companies have special units to investigate suspected arson. State laws now allow a free exchange of information between insurers and law enforcement agencies eliminating the threat of civil suits for libel or violation of privacy. New computer modeling programs enable fire investigators to better understand the dynamics of arson fires.
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