Red Flags of Insurance Fraud

Red Flags of Insurance Fraud

Worker’s Compensation Premium Fraud – occurs when an employer provides false information in order to obtain a lower insurance rating.

Red Flags:

• The employee’s injuries are not consistent with the employee’s job classification or the nature of the business.
• The employee states that his/her employer is other than what is listed on the claim form.
• The employee disputes information supplied by the employer on the first report of injury.
• The employee disputes the average weekly wage due additional income (i.e., cash, per diem, and/or 1099 income).
• There are cross-outs and erasures on the injury forms.
• The employer refuses to cooperate in the claims investigation; refuses to provide employee with claim form.
• Employer’s witnesses to the accident are generally management personnel.
• The employer is routinely cited for safety violations.
• Employer paying medical bills and not reporting injuries.

Worker’s Compensation Fraud – occurs when an employee files an inflated or false injury claim in order to receive benefits or increase benefits.

Red Flags:

• Employee is disgruntled, soon-to-retire, or facing imminent firing or layoff.
• Employee takes more time off than the claimed injury seems to warrant.
• Employee is new on the job.
• Employee is experiencing financial difficulties and/or domestic problems prior to submission of claim.
• Employee is unusually familiar with workers’ compensation claim handling procedures and laws.
• Employee has several other family members also receiving workers’ compensation benefits or other “social insurance” benefits, i.e. unemployment.
• Surveillance or “tip” indicates that the totally disabled worker is currently employed elsewhere.
• Employee comes to office for delivery of benefit checks, avoids use of US Mail.
• Employee cancels or fails to keep appointment, or refuses a diagnostic procedure to confirm an injury.
• Social Security number provided does not belong to employee.
• Employee refuses or cannot produce solid or correct identification.

Staged Accident Fraud – occurs when a person intentionally causes or is involved in an accident, or walks in and reports an accident in order to receive compensation for false or intentional damages and injuries.

Red Flags:

• Claimant has prior accidents of similar circumstances.
• Claimant has multiple past claims with same attorney.
• Claimant is unemployed.
• Lack of familiar or personal relationships between occupants of claimant vehicle.
• Inconsistencies in multiple claimants’ versions of seating in vehicle, why claimants were in vehicle, and destination of claimants.
• Claimant demonstrates familiarity with claims process and claim evaluation.
• Presence of an overly enthusiastic witness at the accident scene.
• Claimant has recently purchased vehicle, and/or insurance.
• Victim is usually female or elderly.

Property Fraud – the falsification or inflation of a claim for the loss of personal property in order to obtain a larger settlement.

Red Flags:

• Insured is overly pushy for a quick settlement.
• Insured handles all business in person, thus avoiding the use of the mail.
• Losses are incompatible with insured’s resident, occupation and/or income.
• Losses include a large amount of cash.
• Insured is willing to accept an inordinately small settlement rather than document all claims losses.
• Buildings and/or contents were up for sale at the time of the loss.
• Suspiciously coincidental absence of family pet at the time of fire.
• Building and/or business was recently purchased.
• Building is in deteriorating condition and/or lacks proper maintenance.
• Fire scene investigation reveals absence of items of sentimental value; e.g. family Bible, family photos, trophies.
• No police report or an over-the-counter report in situations where police would normally investigate.
• Insured’s loss inventory differs significantly from police department’s crime report.

Disaster Fraud – occurs in the aftermath of a disaster when the insured claims false or inflated claims on intentionally caused or pre-existing damage.

Red Flags:

• Insured declares extensive losses without physical evidence, photographs or documented receipts.
• Items claimed to not match claimant’s lifestyle, decor, house, occupation or income.
• Lack of carpet indentation from alleged large furniture or appliances.
• Insured is overly pushy for quick settlement.
• Investigation reveals absence of family photographs, heirlooms or items of sentimental value.
• Affected area was not evacuated.
• No other homes were damaged or destroyed in the affected area.
• Insured claims items were new.
• Insured can’t properly describe items as to function or features.
• Insured property was not located in major damaged area.
• Property was in poor condition prior to loss.
• Insured cannot produce damaged item(s) for viewing.
• Insured claims unrepaired damage from a previous disaster.

Securities / Promissory Notes Fraud – the marketing and selling of investment opportunities that do not qualify with the regulations set forth by or have not been registered with the Office of Financial Institutions.

Red Flags:

• Unbelievable interest rate offered on investment. If it seems “to good to be true”. . . it probably is.
• An agent or other representative urges you to pay with cash.
• A salesperson urges you to cash in your certificates of deposit (despite the interest penalty) and put the money into investments, annuities, or life insurance policies.

Vehicle Theft Fraud – occurs when the owner of a vehicle disposes of or fraudulently reports their vehicle stolen in an attempt secure a settlement.

Red Flags:

• Insured has lived at current address less than six months, or been with current employer less than six months.
• Insured does not have a telephone or is difficult to contact.
• Insured is unemployed.
• Insured claims expensive contents in vehicle at the time of theft.
• Insured is behind in loan payments on vehicle and/or other financial obligations.
• Insured has a previous history of vehicle theft claims.
• Vehicle was recently purchased.
• Vehicle has a history of mechanical problems or is a “gas guzzler”.
• Vehicle has incorrect VIN, or VIN is different than VIN appearing on the title.
• Vehicle is recovered with seized engine or blown transmission.
• Vehicle is recovered stripped, burned, or has severe collision damage within a short duration of the time after loss allegedly occurred.
• Loss occurs within one month of issue or expiration of the policy.
• Coverage was obtained via walk-in business to agent.
• Coverage is for minimum liability with full comprehensive coverage on late model and/or expensive vehicle.
• Police report has not been made by insured or has been delayed.
• License plate does not match vehicle and/or is not registered to insured.
• Salvage yard or repair garage takes unusual interest in claim.