Tuesday, September 27, 2005

A LOOK AT INSURANCE FRAUD

Did you know that the annual loss relative to non-health insurance fraud is approximately $1.5 billion dollars? The National Insurance Crime Bureau (www.nicb.com) reports that ten percent or more of property & casualty insurance claims are fraudulent. Insurance is classified as either external fraud, or internal fraud. External fraud includes fraudulent activity committed by applicants for insurance policies, third party claimants, or professionals who provide insurance services to claimants. Internal fraud refers to fraud within the insurance industry itself. This includes bribery of company officials, misrepresentations of facts by insurance personnel, employees, agents, etc. for their personal enrichment. Elements of FraudFor insurance fraud to exist, four key elements need to be present:1. Intent to defraud. 2. Knowledge – that what the person is doing is wrong, or a false statement. 3. Misrepresentation – creating or making a false impression that leads to payment. 4. Reliance – The insurer would not have paid for the claim but for the misrepresentation. Some good sources of information concerning insurance fraud can be found at these sites: www.zalma.com. Barry Zalma is a west coast attorney who specializes in insurance fraud, and his web page contains numerous articles on various aspects of insurance fraud, as well as some good links. www.iii.org . The Insurance Information Institute carries current stories on various forms of fraud. www.nicb.org. The National Insurance Crime Bureau is an excellent source of fraud information. Almost all insurers belong to this group and there is a lot of material available on their site. If you’re looking for some checklists on insurance fraud, you can check the web sites of these private insurance companies: www.converium.com www.aig.com.

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