How many fraudulent claims would you guess were made against your organization in the past year? Just a few? None? The fact is, across all industries, 10 percent of property and casualty losses are due to insurance fraud. It’s an $80 billion-a-year problem that continues to plague companies of all sizes and types. The best way to be proactive when combating fraud is to create an action plan. Here are some steps you can take to help stop fraudulent claims.
1. Give the investigation a head start. Ask yourself (and your insurer) these questions: What information would be most helpful to our insurance carrier when it investigates the claim? What type of information do we need in order to file our first report as soon as possible?
2. Know the red flags! Watch out for these indicators of potential fraud:
- No one witnessed the accident.
- You receive an anonymous phone call or letter alleging possible fraud.
- You receive a law enforcement inquiry regarding the validity of any part of the claim.
- The first letter or phone call you receive from an attorney is on the day of the accident.
- The claimant has been involved in three or more similar claims in the past two years, according to the database of the Insurance Services Organization (ISO).
- The claimant has serious financial difficulties.
- The claimant uses and is unusually familiar with insurance terminology.
- The claimant uses a post office box or hotel as an address and states that no permanent address exists.
- The claimant or attorney makes a demand for early settlement before all medical information is received.
3. Train your employees. There’s no better time to train employees on the topic of claim fraud than during orientation. But whether they’re new or current employees, they should all know and learn the following:
- Every employee is responsible for fighting fraud.
- The areas of the company where fraud is most likely to occur
- Red flags — for fraud in general and for your industry in particular
- Fraud is not a victimless crime. Innocent people can and do get hurt and killed.
- Fraud leads to increases in premiums for companies, increases that can affect workers’ salaries, bonuses, job security, etc.
Be sure to maintain consistent communication with employees regarding the internal and external risks of fraud and the steps management is taking to combat fraud.
4. Create a set of best practices to respond to potential fraud — and make sure they’re followed. It’s important to create a set of guidelines and best practices for combating fraud and to make it easily accessible to all. Having a set of documented procedures can also assist when defending legitimate claims.
By creating an action plan to address and identify fraudulent claims, you can help lessen the likelihood of fraud affecting your business.
 National Insurance Crime Bureau. Insurance Fraud: Understanding the Basics. Retrieved from https://www.nicb.org/File%20Library/Theft%20and%20Fraud%20Prevention/Fact%20Sheets/Public/insurancefraudpublic.pdf
 Coalition Against Insurance Fraud. The Impact of Insurance Fraud. Retrieved from http://www.insurancefraud.org/the-impact-of-insurance-fraud.htm