what is insurance?
Getting insurance shields your possessions or you. It shields against unexpected events that cause loss. An insurance company gets a fixed sum of money. This money is called a premium. In exchange, the insurance company agrees to pay us.
They pay if something bad happens to us, such as a vehicle accident, home fire, or medical emergency. In short, insurance gives us security. It does this by shifting the risk of loss to the insurance company.
EXPLANATION OF FRAUDS IN INSURANCE COMPANY?
Insurance fraud is any act committed to defraud an insurance process. Insurance fraud occurs when people deceive insurance companies for undeserved money or benefits. This kind of dishonesty occurs by making things up or lying about accidents or paperwork. This can happen during various insurance stages like applying, claiming, or renewing.
For instance, when applying for insurance, someone can lie about their property’s worth. They can also lie about their medical history. They do this to pay a lower price. Some people pretend to get hurt more in an accident. They do this to get their insurance to pay more. Some people might go so far as to make up documents to justify their dishonesty.
EXAMPLES OF INSURANCE FRAUD ;
Application fraud ; happens when someone applies for insurance. They give incorrect or misleading information. The goal of this dishonest action is to get insurance at a cheaper cost. For example, someone may lie about their driving record. They can also lie about their health or their possessions’ worth.
Claim fraud ; is the act of lying to an insurance company. It is also making things seem worse than they are. They may claim that their injuries from a vehicle accident, or a storm caused more damage to their home. This includes life, health, house, and auto insurance. It’s like pretending something bad happened to get paid by the insurance company.
Staged accidents ; are those when someone plans a fake accident. They do it to trick the insurance company. The goal is to get payment for damages or injuries that never happened. They intentionally cause an incident, like a car crash or a slip and fall, to make it look real. They might work together to make it seem real. Then, they claim money from the insurance company.
Forgery or falsification; happens when someone makes fake documents. They might create false medical records, receipts, or bills to back up a fake insurance claim. They might change existing documents to make it look like they had more damage.
Identity theft ; is when someone steals another person’s credit card data. They also steal their name or social security number. They use it to commit fraud or other crimes. Identity theft may involve using someone else’s identity. This is for buying insurance or making false claims under their names.
HOW INSURANCE COMPANIES CAN SAFEGUARD THEMSELVES FROM FRAUD;
Insurance companies can protect themselves from fraud in a few ways. First, they can use advanced computer programs. The programs spot suspicious patterns or behaviors that might show fraud. They should verify information thoroughly before approving profiles, check medical records or investigate accidents.
Another important way is educating their employees. They should do this by training staff to spot signs of fraud and to handle suspicious claims.
Insurance companies need to work with police and others. They must share information to catch fraudsters. By working together, they can build stronger cases against those who try to cheat the system.
Preventing fraud is about being proactive. By using technology, educating employees, and having strict policies. Insurance companies can protect themselves from fraud.
CONCLUSION;
In summary, insurance fraud is a big problem for everyone. It’s not just about losing money. It messes up how insurance works. It makes honest people pay more for insurance. Plus, it makes people lose trust in insurance companies and the whole system. To stop insurance fraud, everyone needs to work together. By stopping fraud, we can keep insurance fair for everyone and make sure it works properly when we need it