Insurance fraud can affect anyone. Taking a shortcut when it comes to your insurance could prove catastrophic and costly.
Different Areas of Insurance Fraud and How to Identify Them
Insurance fraud occurs when an insurance company, agent, adjuster or consumer commits a deliberate deception in order to obtain an illegitimate gain. Below are brief descriptions of each source and ways to identify them.
Fake Insurance Companies--Fake insurers collect premiums for false policies with no intention of paying claims. These illegitimate companies offer significantly lower premiums and are often difficult to reach by phone.
Unlicensed Insurance Companies--Legitimate companies not licensed to sell insurance market their products - such as health discount plans - as "insurance." In reality, these are unregulated, non-insurance products.
Fraud by Individuals--Individuals within the insurance industry can also be guilty of insurance fraud. For example, an agent may collect premiums from consumers without passing them on to the insurer. As a result of not receiving these payments, insurance companies cancel or do not renew the consumers' policies.
Fraud by Consumers--Consumers also commit insurance fraud. Deliberate attempts to stage an accident, injury, theft or arson that would be covered under an insurance policy; exaggerating a legitimate claim or lying about how the loss occurred; or providing false information are all examples of consumer insurance fraud.
How to Help Protect Against Insurance Fraud
- Verify Before you Buy: If you are unsure about the insurance company or agent you are dealing with, remember to STOP & CONFIRM
- STOP - before signing any paperwork or writing a check
- CONFIRM - with the Massachusetts Division of Insurance that company or agent offering insurance is legitimate and licensed in Massachusetts
2. Watch for Hidden Fraud
Even if you purchase a legitimate product from a licensed insurance company, you should watch out for signs that an individual agent or employee might be committing fraud. Warning signs include the failure to receive a copy of your insurance policy in a timely manner, inability to get in contact with the insurance company or agent, and significantly lower premiums. If you have questions or concerns, contact your company directly or call the Division of Insurance for assistance.
3. Report Suspected Insurance Fraud
If you believe you may be a victim of insurance fraud, or if you are aware of an instance of insurance fraud, it is important to file a complaint with the Division of Insurance's Consumer Services Unit.
The Insurance Fraud Bureau (IFB) of Massachusetts is the state's special fraud bureau. The IFB undertakes cases for investigation and preparation for criminal prosecution.