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Insurance Fraud. The Not-So-Victimless Crime!

September 9, 2015

Photo by Jupiter Images


What constitutes fraud?

Per, fraud is defined as “deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage”. Insurance fraud is therefore, deceit in insurance claims for profit. This deceit can be committed by either the insurance carrier or the insured.

Who commits fraud?

Too many people!  On, the website for the Coalition Against Insurance Fraud, the following headlines were listed for yesterday, September 8, 2015:

In the first case, the soldier was the insured, committing fraud against the insurance carrier.  In the second article, drug abusers fraudulently report their medications stolen so they can get replacements paid for by the insurance company.  The third article deals with identity theft of Medicare patients by third parties.  Lastly, government employees are being investigated for possible organized falsification of disability claims.

What are the consequences?

Incarceration is one possible consequence of fraud, as the soldier in the first example found out.  Job loss is another result suffered by some of those involved in the Baltimore case.  There are hidden costs too.

Many people see ripping off corporations as victimless crimes.  What these people don’t seem to realize is that the corporation, in this case the insurance carrier, passes its losses along to its customers by raising rates.

While these crimes were perpetrated by different players in the claims process, all four crimes cost the insurance buying public in higher premiums.  Fraud certainly isn’t the only reason for increases in premiums, but it is a biggie.  Think about it the next time your premium goes up!

As always, thanks for reading.

—E. A. Cooke

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