Insurance companies become the so-called rescue angels of their clients when those get into serious financial trouble. In our time, you can insure anything – real estate, vehicle, your pet, and, of course, yourself. However, judicial practice shows that not everything always goes so smoothly, as many insurance agency clients fall victim to insurance fraud even at the stage of signing a contract.
New areas of the market not only provide a perspective for the development of consumer supply but also become the basis for the creation of new fraud schemes. Insurance fraud is no longer a new phenomenon and has been used around the world for many years. However, Simon Mosheshvili – an experienced entrepreneur and expert in IT innovations – believes that knowing how scammers operate can help you avoid a lot of trouble.
Types of Insurance Fraud
First, it is necessary to understand what types of scams generally exist in the insurance industry. You can classify fraudulent activities in different ways and depending on a variety of criteria.
Depending on who is committing the crime:
- The client resorts to fraud against the insurer;
- The insurance firm deceives the client;
- The insurance organization appears as an element or stage of the scam.
Depending on the level at which the fraud is organized:
- “Amateur” insurance fraud is carried out mainly by consumers of insurance services;
- “Professional” swindle implies a well-thought-out scheme, where the criminal community’s structure is involved.
Four types of insurance scam:
- Direct fraud (for example, a staged insurance event);
- Indirect fraud (when the circumstances can be considered factual, but the payment amount is overstated because of data distortion);
- External scam (conducted by the applicant or a third party as part of the insurance case proceedings);
- Internal fraud (the participation of the insurance firm employees in the crime).
The most common fraud schemes are being improved by resourceful swindlers every day around the world.
How to Avoid Becoming a Victim of Insurance Fraud?
Unfortunately, insurance fraud is ubiquitous today. To prevent the violation of the rights by the insurance agency, clients should study the proposed insurance agreement thoroughly. You have the right to request an explanation from the insurance company’s employees, but a better option is to contact a lawyer. Besides, you can demand a copy of the standard insurance contract from the insurer and consult a legal expert. This way, you will avoid many problems, choosing a reliable insurance organization that does not deceive its clients.