We are the true victims of insurance fraud.
Some crimes are easier to justify than others in people’s minds. For example, a person wouldn’t dream of wandering into a someone’s house and taking $20 out of their purse. This would be home invasion, petty theft, and might even be traumatic for the victim. However, if this person was a ‘faceless’ corporation with many millions of dollars’ worth of turnover annually, the thief might approach the crime a little differently.
If, rather than trespassing, they could take a few hundred dollars from this corporation simply by filling in a few forms…
…the victim starts to disappear from the picture.
How Insurance Fraud Often Occurs
The phrase ‘insurance fraud’ creates images of elaborate scams.
It might make you think of inside jobs, hired accomplices, destruction of property, and sophisticated conspiracies. Of course, this does happen, but most of the time insurance fraud does not take this form at all.
In the majority of cases, insurance fraud involves intentionally filling in the wrong information on a form. Perhaps your the scammers house was broken into and a mountain bike worth $75 was stolen, but they try to claim that the value was $750. Maybe they experienced the theft of an empty vehicle, which usually contains expensive equipment related to their business, and they try to claim for an additional loss which has not occurred. For the most part, this is what insurance fraud looks like.
This, also, is why insurance fraud is so common. With just a few words and a signature on a piece of paper, or with a decimal point shifted a few millimeters to the right, a scammer can receive an easy payout.
Those who commit insurance fraud feel so detached from their victim that they begin to lose sight of this victim altogether.
The True Victims of Insurance Fraud
An insurance company is a business like any other, and businesses must protect their profits.
The losses from scams begin to add up for the insurance company. In response, the insurer raises the monthly premiums on policies.
So, it is not just the insurance company who foots the bill for fraudulent activities; it is the customers who must pay.
But this is not the only consequence of insurance fraud. Fraud is shrinkage, and any business which experiences shrinkage will do everything they can to prevent it. This means, increasingly strict and stringent checks on new insurance claims. In turn, this can cause serious delays on claims, which puts genuine claimants at a major disadvantage and may even prevent honest claims being processed at all. These people who have done no wrong and who need an insurance pay-out more than anyone, are those who bear the cost.
Just because a scammer will not meet the victim face to face, does not mean that the victim does not exist.
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This information is provided for general consumer educational purposes only and is not intended to provide legal, tax or investment advice.