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Insurance Scams That Needs To Be Avoided

About the Talk

February 26, 2015 10:00 PM

Iceland

Iceland

In order to gain more money in the now so-materialized world, people and companies have thought of things to gain out of greed. Insurance agencies are no exceptions especially in places which have lose insurance policies like Jakarta in Indonesia, South Africa and Cambodia. The Federal Bureau of Investigation (FBI) had released the most common insurance fraud used by the insurance companies.

Premium Diversions

It is considered as an embezzlement of insurance premiums and is considered the most common type. This happens when the insurance agent doesn’t wire the money to the insurance company and keeps it to himself. Other form of premium diversion scam involves selling policies without license, collecting premiums and then not paying claims. Payers are advised to keep track of this kind of fraud by knowing and verifying the legitimacy of the agent.

Asset Diversion

This large-scale scheme involves theft of insurance company assets held to pay valid claims. This most frequently occurs as insurance companies merge, reorganize or change ownership.

Fee Churning

In this scheme, a group of people set up a company that will eventually fail. The business gets involved in reinsurance agreements, and people in different steps of the process pocket commissions. The amount of a premium is cut by each repeated commission until the money to pay claims runs out. This scheme lasts as long as it does because each individual move looks normal as it occurs. The full picture emerges only after the damage is already done.

How to report Insurance Fraud

  1. Report fraudulent behavior to your state’s insurance frauds bureau.
  2. Contact the specific insurance company’s fraud hotline if one is available.
  3. Turn in the social security fraud perpetrators.
  4. When you are reporting the scheme, make sure to give all pertinent details and any other documents that may help.

Be Wise. Act Wise.

The most important factor before buying an insurance plan is to be wise enough to know which agent is legit and which company can be trusted. It’s better to be cautious than regret in the end. Obtain the agent’s name, business identity, telephone number, street address, mailing address, and business license number before you transact business. Some con artists give out false names, telephone numbers, addresses, and business license numbers. Verify the accuracy of these items. For insurance company, make sure they are listed in your local insurance bureau. It is better to get listed with big companies such as Axis Capital with group of companies based in Bermuda (its main location

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