Insurance fraud detection and prevention tactics

Author: Barry Zalma
Insurance fraud detection and prevention tactics are not easy to practice it comes only through experience. An Unemployment Insurance claimant commits fraud by submitting false information to the department when filing an Unemployment Insurance claim in an effort to obtain alimony to which they are not entitled. Similarly, an employer commits fraud when they produce false information to the department in an effort to obtain a lower tax rating or deliberately misclassify an employee as an independent contractor to avoid paying Unemployment Insurance tax altogether.

Below mentioned are a few Insurance fraud detection and prevention tactics.
1. Role of statutory insurance policies
The standard statutory insurance policies make a policy void in case of fraud. By proving fraud, the insurer has an absolute defense to a claim. By proving fraud the insurer can declare the policy void.
2. Criminal Offence
In most states insurance fraud is a crime. Many follow the model statute prepared by the coalition against insurance fraud. Others enact their own statute. Some have none.
3. Prosecution
Contrary to the belief of many prosecutors, insurance fraud is a fairly easy crime to prove. All the prosecutor needs to prove is that the insured has submitted a claim to the insurer, that the claim contained a single false document. It also has to prove whether the insured misrepresented a single material fact, concealed a single material fact, obtained the policy by a falsehood or swore falsely with regard to the claim.
4. Proving an insurance fraud
Prosecutors can prove Insurance fraud by presenting a witness who testifies that document claiming to be an invoice from a particular vendor did not originate at the vendor’s store. Prosecutors can also prove fraud by presenting a forensic expert who can testify that a particular document is false or by presenting insurance industry personnel about the results of their investigation.
5. Convictions of insurance fraud
Although insurance fraud prosecutions are rare in comparison to the number of frauds attempted, once an insured is arrested for insurance fraud, the insurer must put the claim investigation on hold to allow the insured to relieve himself or herself of the criminal prosecution. If convicted, the claim can be denied. If not, the investigation can be resumed to determine if there is a civil defense to the suspected fraudulent claim. Insurance claims personnel and counsel cannot rely upon criminal investigators and prosecutors. It is not the obligation of the insurer’s employees to prove a crime.

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