Insurance Fraud and its Impact on Business

Insurance Fraud and its Impact on Business

One might assume that insurance fraud crimes only affect insurance companies. That perspective, however, is not taking the whole picture into account. Insurance fraud isn’t only harmful to insurance companies. It can also have a direct and negative impact on individuals, communities and small businesses.

So what defines insurance fraud? It is the act by which an individual commits a crime through which they defraud an insurer or insurance process. Essentially, this boils down to someone knowingly and illegally obtaining benefits they are not entitled to. Insurance companies lose significant amounts of money to crimes like these every year.

Another assumption might be that if a fraudulent attempt is not successful they may not get caught or charged. What actually happens is that this individual will be charged with attempted theft via deception.

What impact does insurance fraud have?

First we should look into what kinds of insurance fraud there are. There are many, but below is a list of the most common ones:

  • Health insurance
  • Workers compensation
  • Life insurance policy
  • Autmobile insurance

To clarify, insurance fraud has a very real and very negative impact on everyone as a whole. That is to say, the consequences of a crime of this nature don’t stop there. These tremendous sums of money that insurance companies lose to fraud don’t just get forgotten about. This is a cost to an insurance company that could cause serious destabilization and threaten its survival. Therefore, they must offset this cost somehow, make up for it and adapt to it.

When something like insurance fraud is committed, it forces the hand of insurance companies. They are left with no other option than to increase the premium of their insurance costs. These costs then make their way to individuals and businesses. Causing everyone to have to pay for the crime and benefit of a single person, because we all need insurance.

Can we prevent insurance fraud?

This is the reason why companies need to invest in various methods for insurance fraud prevention. One of the predominant ways in which businesses invest in preventing insurance fraud in the first place is investigation. They invest significant sums of money into insurance fraud investigations, so as to prevent the fraud from occurring in the first place.

If you find yourself in need of a licensed private investigator and their particular set of skills, please feel free to contact us. This link will get you in contact with one of our team members.

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