Is your tribal business a target for an insurance scam?
Whether it’s a false claim or one with exaggerated damages or injuries, insurance fraud is rampant. It’s enough to turn a tribal business owner or insurance agent into a cynic of human nature. It slows legitimate insurance claims, increases premiums and, in some cases, puts innocent victims in danger, such as when a crooked body shop refills the airbag compartment with foam peanuts instead of a life-saving airbag.
Each year more than $80 billion is lost to fraudulent insurance claims in the United States alone. That equals the total receipts for the motion picture and video industry in 2015, according to the Census Bureau. It also accounts for approximately 10 percent of the insurance industry’s total annual losses.
Insurance fraud: Hard vs. Soft
Sometimes the potential fraudster is easy to spot: they have a criminal background, they’ve filed numerous claims in the past, or they’re mysteriously injured when no one is around. That’s termed hard fraud, when someone deliberately manufactures a claim.
Other times it’s not so easy to spot. Take, for instance, a long-time client who’s paid his premiums on time for years. When he has a legitimate claim, he may decide the insurance company owes him for all those on-time payments made, and inflate his claim. Or she may fudge on the date of the accident or exactly how it occurred. This is soft fraud: it starts out as a legitimate claim, but then the claimant adds an element of fraud. According to the Insurance Information Institute, soft fraud costs insurers roughly $32 billion a year.
Insurance fraud alerting factors
Whether you’re a tribal business owner (an insured) or a tribal insurance producer, here are a few red flags you probably know to look for:
- A history of filing claims
- Delayed reporting of a claim or injury
- An injured customer who refuses aid, then returns with doctors’ bills that seem inflated compared to the accident
- A customer or insured who’s unemotional and unflustered when submitting a sizeable claim
- Refusal to involve tribal police
- A new claim filed shortly after the policy is in force, similar to a claim they filed before cancelling their last policy
- Handwritten or otherwise suspicious receipts provided for repairs or replacement of damaged property
- An insurance applicant who already has coverage, but wants another policy
None of the indicators above immediately prove insurance fraud. Instead, they flag a claim, saying “This one deserves a deeper look.”
View the infographic below from Coalition Against Insurance Fraud to learn other insurance fraud scams and schemes.