Red Flags in Claims: What You Need To Know

What are the elements of fraud?

Fraud is defined as an intentional misrepresentation of a material fact by a person who knows or believes it to be false. Fraudulent acts add up and end up costing honest customers hundreds in insurance premiums. The Coalition Against Insurance Fraud (CAIF) places the cost of insurance fraud at a whopping $308 billion annually in the United States. All the money people think they are ‘saving’ result in more money lost through hefty fines, imprisonment or both.

“Insurance Fraud costs the average U.S. family between $400 and $700 per year in the form of increased premiums.”

Nearly all states require insurers to have a Special Investigations Unit (SIU). Twenty six of these states require that insurance companies have a written plan to combat fraud and demonstrate how they are effective. Insurance companies may have an in-house SIU or a contract program.

Recognizing red flags in claims verification is crucial for maintaining the financial health of insurance companies, upholding the integrity of the industry, protecting policyholders, and ensuring that insurance services remain accessible and affordable for everyone. It is a critical component of responsible risk management within the insurance sector.

Red flags in claims you should lookout for:

Red Flags for Workers Compensation:

• Late reporting: Claims reported significantly later than the accident date may raise suspicions, as there may be time to manipulate evidence or fabricate details.

• Facts are inconsistent: Discrepancies in the claimant’s statements, including variations in the accident description, timelines, or damage assessments, can be a sign of potential fraud.

• Disgruntled: A disgruntled worker is likely to make claims against their company.

• Pushy about settling claim: They want to reap the rewards of workers comp without any delays.

• No witnesses: If there were witnesses to the incident, and their statements do not align with the claimant’s account, it could raise concerns about the legitimacy of the claim.

• Unable to reach: Claimants who refuse to provide requested documents, submit to interviews, or cooperate with the insurer’s investigation may have something to hide.

• Monday morning claims: After a long weekend, your employee claims to be in pain from an injury sustained last Friday. Read more about Monday morning injuries.

Red Flags for Auto Claims:

• Phantom hit and run crash: Claims involving hit-and-run accidents without credible witnesses or evidence may be fraudulent attempts to collect insurance benefits.

• Exaggerated Property Damage: Claims that exaggerate vehicle damage or include damage unrelated to the accident.

• Subjects admit liability immediately: It’s possible this person had a plan and is wasting no time to execute it.

• Previous auto claims : Claimants who have filed multiple claims in a short period, especially if they involve the same vehicle or similar incidents, may be attempting to take advantage of the insurance company.

• Minor impact, soft tissues injury: While soft tissue injuries can be genuine and painful, they are also commonly associated with fraudulent or exaggerated claims.

• Delayed police report (or not filed at all): A police report would’ve required more information than they are able to provide.

Red Flags for Disability:

• Modifying or hesitant to sign an authorization: poor cooperation can be suspicious during an insurance claim.

• Work or personal related issues: subjects with mounting debts or financial troubles, may be more inclined to exaggerate or fabricate disability claims.

• Reluctant to provide personal information: They may be unsure of what the repercussions of faking a claim might be and don’t want to cooperate.

• Malingering indicators: Observing signs of malingering, such as a claimant dramatically exaggerating symptoms during assessments or inconsistent physical performance during functional capacity evaluations.

• Doctor Shopping: Shopping around for doctors, especially if the claimant is going farther than 15 miles from their home, might mean they are looking for a doctor that tells them what they want to hear.

Bottom Line

In conclusion if your claimant is uncooperative, acting suspicious or simply inconsistent with their story, there may be a fraudulent case on your hands. This applies to all claims. The people who have something to hide usually show it through simple slip ups – if you’re diligent enough you will be an expert on identifying them.  Be the first line of defense in the battle of fraud elimination!