Why You Should Be Concerned About Fraudulent Insurance Claims

Insurance companies provide a very valuable service to citizens in the form of financial certainty at the time of emergencies. However, lately it has been observed that this service is being widely misused in the shape of insurance fraud, and that trend is showing a consistent increase. The matter has become so severe that lawyers and doctors are colluding to defraud insurance companies, which is threatening the overall viability of the healthcare sector.

The problem has been significantly on the rise in Jamaica. The Insurance Association of Jamaica paid a total of $13.2 billion general claims, out of which approx. $9.4 billion was paid for motor vehicle claims. Staged accidents are the new fad and just one of the many shrewd ways people are trying to fool the authorities. In order to rectify the situation, electronic traps are being set up for motor vehicle insurance frauds.

Insurance companies provide a very valuable service to citizens in the form of financial certainty at the time of emergencies. However, lately it has been observed that this service is being widely misused in the shape of insurance fraud

The Road Towards Rectification

The IAJ plans on partnering up with the revenue authorities and come up with a system that entails the development of an elaborate database of all vehicle owners. This database will also serve as the focal point for police authorities for their investigations.

After this database is developed, it is expected that no one will be able to fool the authorities by showing fake papers anymore. The database will effectively help get rid of any bluffs which are usually played by people who show counterfeit documents or insurance certificates as that information will be quickly corroborated with the database being maintained by the authorities.

It is expected that the records will be maintained from the point of license issuance. The information will be updated in real time by the insurance companies and the police will be able to access the information on their smartphones, ultimately leaving very little margin for people to enact their fraudulent schemes. This, along with electronic traps and cameras, will be used to verify the claims and counter-check the stories in order to avoid any frauds, such as staged accidents.

The database will effectively help get rid of any bluffs which are usually played by people who show counterfeit documents or insurance certificates as that information will be quickly corroborated with the database being maintained by the authorities

The Case of the Healthcare Sector

While fraudulent cases are fairly common as far as motor vehicles are concerned, health insurance frauds are not rare either. Some people are under the impression that they have a time limit on their health cards, and hence try to use it up before the year ends by spending on the treatment of unnecessary and exaggerated symptoms and treatments. The word spreads that such a practice is necessary to get the most advantage out of health cards, and ultimately everyone starts using their cards illegally, which leads to fraud in the health sector.

While there is absolutely no harm in using your health card for genuine reasons, however creating an unnecessary urgency is unfair to the insurance companies as well. Of course, what goes around comes around, and by the end we eventually witness a hike in the yearly premiums of health insurance schemes.

Some people are under the impression that they have a time limit on their health cards, and hence try to use it up before the year ends by spending on the treatment of unnecessary and exaggerated symptoms and treatments.

It May Not Look Like Fraud, But It Is

What people fail to realize is that although their tiny workarounds of the system may seem harmless and trivial to them, in large numbers they can cause quite a stir in the balance sheet of insurance companies and have a profound effect on those customers who genuinely need insurance at a cheaper premium. Each fraud contributes to the weakening of the entire system, putting everyone involved in an extremely tight spot.

According to Orville Johnson, who is the Executive Director of IAJ, people believe that they are simply taking advantage of what insurance companies owe them, and that trend is increasing. People are increasingly claiming more and more from insurers. The total amount of claims made by people stood at $18 billion in the past year, and before that it was around $17 billion.

This trend is expected to continue, which means that either insurance companies will have to keep increasing premiums every year, an unpopular move, or they would have to opt for stricter background checks which may allow them to quickly and accurately verify every insurance claim. Thankfully, they have opted for the latter.