The following is a guest post
Fraud can be found everywhere. The motor insurance industry has been particularly open to fraud since its inception. While fraud is a broad term and can be recognized in many forms in insurance, there is a clear dichotomy between the fraud in underwriting and fraud from a claim. It is not only the consumers who try to acquire money through fraud; there have been many cases which have included internal employees scamming their own employer or agents selling dubious policies
Fraud in underwriting involves supplying the insurance company with incorrect information such as overvaluing the item you wish to insure, this often involves providing falsified documents. A fraudulent claim relates to an attempt to receive some reimbursement for damage or theft that didn’t take place or if there is damage where it is exaggerated.
Insurance companies however, are continually expanding their resources to prevent and fight fraud. If there is a strong suspicion that a fraudulent claim has been made, an insurance company will carry out a thorough investigation. When the details of a case are particularly suspicious, the claimant can expect to be exhaustively questioned. These investigations are often carried out by private detectives. In the case where fraud is proven there can be considerable consequences. It could mean a cancellation of the policy and becoming uninsurable with most companies or it could mean a lengthy jail sentence.
Car insurance groups have been especially susceptible to fraud as there are so many types of fraudulent claims that can be made. Claiming against car insurance groups has provided a lucrative business for organised gangs. There are many incidents of deliberately caused accidents, arson attacks and falsified car documents to claim on a non-existent vehicle. But it is not just criminal gangs who participate in car insurance fraud. Ordinary members of the public are also involved but obviously on less significant level monetarily. Nonetheless, these fraudulent claims cost all policy holders and if discovered, no matter how minor the claim, the perpetrator could find that they face considerable obstacles obtaining future financial packages.
During a recession car insurance groups are more mindful that individuals with financial difficulties may be tempted to make fraudulent claims. In addition, as more and more customers obtain their insurance online car insurance companies are discovering that the information supplied is intentionally inaccurate in an attempt to reduce premium prices. Essentially though fraudulent claims cost all policy holders and supplying incorrect information will mean no pay out.