By Samy Beshay: Insurance fraud

Mr. Samy Beshay: Expert in all kinds of insurance

By Samy Beshay Insurance fraud 

It occurs when a person makes false insurance claims to obtain compensation or benefits they are not entitled.

Insurance fraud takes many forms, but it is considered a severe crime in all jurisdictions regardless of the type.

Definition of insurance fraud or fraud

It is an insurance company's wrongful or criminal deception to receive compensation or benefits illegally.

What is insurance fraud?

It means obtaining a favorable but fraudulent outcome during an insurance claim. Insurance fraud may require someone to file an entirely false insurance claim or exaggerate damages, injuries, or other losses to obtain benefits. 

Types of insurance fraud

Complex fraud occurs when someone intentionally fakes an accident, theft, or injury to collect money from an insurance company.

For example, when his old car breaks down, a person who has been out of work for several months. Desperate for money to replace his vehicle, the unemployed man decides to make it look like someone broke into his house, then files a police report alleging the theft of several expensive items. This type of hard insurance fraud is expected and why insurance companies hire an insurance fraud investigator. Complex fraud cases always lead to Felony criminal charges.

Mild fraud occurs when someone has a valid insurance claim but fakes part of the claim or exaggerates the damages to get the maximum benefits. Many people do not consider this as severe as complex fraud, but it is still a crime, increasing insurance costs for clients.

For example, a woman is involved in a minor collision when someone gets back to her car in a parking lot. There is severe damage to a part of her car, and it is not injured. When filing an insurance claim, the lady reports neck and back pain and is seeking treatment by a doctor to support her injury claim. In this type of soft fraud, the lady has a valid claim for damages to her car, but she claims personal injury in an attempt to receive higher compensation.

Losses due to fraud

It is difficult to determine the exact amount of money lost due to insurance fraud cases, as the crime often goes unnoticed. It is believed that the number of fraud cases detected is much lower than what happens. Some organizations estimate that more than $80 billion is lost each year due to fraudulent insurance claims in the United States alone. It is estimated about 10 % of the insurance industry's total annual losses are due to fraudulent claims. The higher cost of fraudulent cases is passed on to insurance customers through higher premiums, as insurance companies try to offset some of these losses.

Life insurance fraud

Life insurance fraud occurs when someone claims their death, or the end of another person, to obtain life insurance payments. The specified beneficiary receives the insurance settlement when the life insurance company is notified of the death. Many people committing life insurance fraud emerged years after the presumed death. If the person is arrested, the person who helped with the life insurance fraud scheme is also charged with the crime. Life insurance fraud is a cruel scam, and because of the dollar amounts involved, it's a felony.

Health insurance fraud

Another form of insurance fraud occurs in the healthcare to receiving benefits. The patients commit health insurance fraud, usually by falsifying, altering records, concealing pre-existing conditions, or not reporting information.

Car insurance fraud

Auto insurance fraud is commonly committed in the United States. It occurs when people cheat in traffic accidents, such as a sudden sharp stop in traffic to injure the vehicle behind them intentionally. Then the scammers claimed that the other driver was at fault and filed a claim for damages to their car.

Another method used by those who engage in insurance fraud is to jump in front of a moving car and claim that the car hit them. When unintended incidents occur, the victim will inflate their injuries to receive more money. They may argue that the accident caused damages caused by something else to get treatment from the auto insurance company.

It is obtaining a quotation for the cost of repairing a car that is higher than the actual repair cost through an unscrupulous car repair center.

Filing a case and requesting the insurance company to pay compensation for injuries unrelated to the accident

- Allegation of disruption to work as a result of the accident 

Fabricating a car accident between two parties who agreed to make a deliberate car accident to demand compensation from insurance companies

Providing incorrect information to the insurance company, such as a residence address other than the address in which the insured resides, giving a wrong number for the number of miles traveled each year.

Home insurance fraud

Home insurance fraud occurs when an individual destroys or falsely reports the theft, items of personal property, a home, or even a car to obtain benefits from the insurance company. When someone reports loss or damage to property, they inflate the claim, report property they never had, or write the damaged items as being branded better, more expensive, and newer than they already were. This may be because the insurance covers the building and all property in the house.

Reporting insurance fraud

A person who suspects someone else of insurance fraud may be wondering how to report insurance fraud. A person wishing to file a fraud report should gather all available information, including the name of the suspect, the names of any organizations or insurance companies involved, and the dates of suspected fraud.

An insurance investigator may be employed by insurance companies or other agencies, such as the local fire department or police. Often, company insurance investigators who look at some of the circumstances of a claim before making a payout process review with insurance attorneys who have some suspicion that a claim is fraudulent. The investigation may continue or even begin after the individual has received compensation from the insurance company.

Insurance fraud penalties

Penalties for insurance fraud vary, depending on several factors of the claim, including the amount of the loss caused by the fraudulent activity and the state's laws in which it was committed. In most states, soft fraud is classified as a misdemeanor and may be punishable by a year or less in prison, fines, community service, and probation.

Many fraud causes contain other offenses that can lead to multiple criminal charges Felony.

Real-life insurance fraud cases

Fake surgeries and drugs

By the 2000s, Dr. David Wexler, a practicing dermatologist in New York City, pushed drug addicts to use his name in fake insurance claims. The doctor billed insurance companies over $400,000 for minor surgeries he didn't perform. In addition to small monthly bribes, the doctor gave many narcotic drugs to the addicts to bring them back. Wexler was arrested and sentenced to 20 years in prison and faced a fine of up to $1 million.

In 2007, Chicago futures magnate Mark Thompson found himself owed about $680,000. Thompson decides to burn down his house and collect the insurance money. To make the fire seem more reasonable, Thompson took his 90-year-old mother downstairs, sprayed accelerators around the walls, and set it on fire. Thompson's mother died in the fire, and he later claimed that she committed suicide by setting the house on fire.

When investigators checked Thompson's finances, they discovered the debt, which was not fully covered by a $600,000 insurance payout. They then find that Thompson stashed the insurance money in an offshore bank account, then filed for bankruptcy, erasing that debt, leaving him with the proceeds of his fraud. Ultimately, Thompson was charged with arson, fraud, and a host of other serious crimes. After the conviction, Thompson was sentenced to 190 years in federal prison.

- In May 2004, Carla Patterson and her son went to Cracker Barrel in Newport News, Virginia, for Mother's Day lunch. After she served soup, Patterson shrieked loudly, saying she had found a dead rat in a bowl of vegetable soup. Soon her son took several pictures of the dead mouse and alerted the media,

Patterson sued the restaurant, trying to get a $500,000 payout. Through extensive investigations and testing, investigators have established that a mouse was placed in soup after it was cooked, leading to accusations of insurance fraud, among other things. Although the Patterson scam deeply affected the restaurant's employees, many of whom had their hours cut or lost their jobs entirely, Patterson was sentenced to one year in prison.

I welcome all your questions regarding all types of insurance to the following email.

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