Insurance fraud is a crime which not only solely affects the insurance companies but also affects individuals or several citizens and various businesses altogether.
Define Fraud
Insurance fraud is defined as an act of crime by an individual in which the insurer or the insurance process is defrauded. In simpler terms, it is the act of knowingly and illegally obtaining benefits which you may not be entitled to or inclined to receive. To which the insurance companies lose a very large amount of money each year.
The lie while defrauding does not have to be successful when caught; even if it is not successful, the individual can be charged with attempted theft by deception.
Impact of Insurance Fraud:
There are many types of insurance frauds, but the most common ones are on the individuals who hold the following insurances.
People with:
- Automobile Insurance
- Health Insurance
- Life Insurance Policy
- Workers compensation
There are serious impacts of insurance fraud, which affects everyone as a whole. When insurance fraud is committed, the insurance company loses a large amount of money. To cover the loss of insurance fraud, insurance companies increase the premium insurance costs, and those costs are then passed onto individuals or businesses.
For instance, when premium insurance increases on businesses, they pass on the increased costs of the premium insurance to their consumers by increasing the expenses of the goods and services that are being provided by them.
In the same manner, the expenses directed towards fighting and investigating insurance fraud and fake claims are then passed onto the policyholders. Moreover, various large firms spend an immense amount of money in investigating frauds and trying to prevent the frauds from occurring.
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