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Pandemic Fires Up Insurance Fraud, Here’s What To Watch For – Forbes Advisor

New IdentityTheft Scam

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Insurance fraud isn’t the most splashy form of crime and it rarely dominates the news cycle. But it does impact your wallet every day.

These numbers might catch your attention: Insurance fraud (non-health insurance) is a $40 billion dollar a year criminal enterprise that costs the average U.S. family between $400 and $700 per year in increased insurance premiums, according to the FBI.

About 75% of insurance industry professionals believe that 10% or more or all insurance claims have some element of fraud, according to the 2020 Friss Insurance Fraud Report, a company that provides fraud and risk detection software to insurance companies.

And some industry professionals believe the number of claims with some element of fraud has nearly doubled since the COVID-19 pandemic.

Industry respondents to the 2020 Friss Insurance Fraud Report survey estimate that 18% of claims contain some element of fraud. The report suggests that the insurance industry’s workplace adjustment to COVID-19 may have contributed to the spike: Remote work resulted in fewer inspections and 75% of respondents reported an increased workload, which may have created gaps in oversight for opportunistic fraudsters to exploit.

For example, due to COVID-19, an insurance adjuster may not have been able to inspect completed auto repairs, which could create an opportunity for inflated billing.

The top pandemic fraud schemes are staged car accidents, billing scams, phantom services and fake accidents occurring at homes, according to the report.

Fraudsters See More Opportunity For Staged Accidents

Staged accidents are the No. 1 pandemic fraud scheme, according to the 2020 Friss Insurance Fraud Report. A staged accident is typically an event where someone purposely causes a car crash in order to make a fake medical claim against your car insurance policy or their own.

Staged accidents more frequently take place in urban areas and in wealthier communities, according to the National Insurance Crime Bureau (NICB). Criminals also tend to target women driving alone and senior citizens, as they are believed to be less confrontational at an accident scene.

A common staged accident scheme is called the “swoop and squat.” In this scam, two cars are driven by criminals and the third is driven by an innocent victim. The “squat” car pulls in front of the victim’s car and the “swoop” car pulls in front of the squat. The squat car slams on its brakes and the victim cannot react in time, rear-ending the squat car. The swoop car takes off and the occupants of the squat car all make injury claims against your car liability insurance.

Here are some tips from the NICB to avoid staged accidents:

  • Avoid driving too close to other vehicles
  • If you are involved in an accident, call the police to the scene
  • Use your smartphone camera to document the accident scene and number of occupants in the other vehicle
  • Watch out for bandit tow trucks, as they are often affiliated with body shops and will try to convince you to use the shop they’re collaborating with

Scammers Hope that Inflated Bills Slip Through the Cracks

Scams involving billing and phantom services can take place when a medical professional or mechanic inflates a bill or charges for services that were never actually done.

For example, if you were legitimately hurt in a car accident, an unscrupulous chiropractor might bill your insurance company for treatments you never received. Another example of inflated billing is when a doctor charges multiple times for a treatment that was performed only once.

These types of billing scams can be very hard to detect. You might not closely inspect a doctor’s bill and the insurance claims adjuster could quickly process payment based on good faith for an accident in which you were injured. If a claims adjuster suspects fraud, they might contact you to verify the types of treatment you received.

Another form of billing scam is done by auto body repair shops. In this scheme, you file a car insurance claim for an accident and bring your car to a repair shop. A dishonest shop might use used parts for the repairs but charge for new parts. Or they might overstate the damage to your car and charge more money than necessary for repairs.

Fake Home Injuries

Fake home injury claims are typically staged accidents in which a fraudster claims they were injured on your property and file a claim against your home insurance. Examples include slip and falls (such as falling down a staircase) and dog bite claims.

Old Insurance Scams with a COVID-19 Twist

While much of the world has been adjusting to the pandemic, fraudsters have also tweaked their playbook of scams and added a COVID-19 twist. Scammers look for ways to prey upon our anxieties and provide a false sense of hope. The fraud-fighting community has urged consumers to be on the lookout for COVID-19 insurance scams. Here are a few to be aware of:

  • Bogus insurance agents. These people claim to be licensed agents and might mimic mainstream insurance companies to sell fraudulent COVID-related insurance products. They’re looking to pocket your premium payment for a product that doesn’t exist. Don’t click on any links or engage with an “agent” who’s pitching COVID insurance.
  • Phishing/spoofing/spam. These are unsolicited emails with a goal to steal your personal information. They might offer COVID-related products such as home testing kits, cures and insurance. The FBI warns consumers not to fill out any forms in an email that requests personal information and do not click on any links within a suspicious email.
  • Robocalls. These are unsolicited phone calls from scammers who might pose as insurance agents or pitch COVID-related products. The Federal Trade Commission (FTC) had previously warned about robocalls from scammers pretending to be from the Social Security Administration offering fake COVID-19 tests to Medicare recipients. The Federal Communications Commission has collected some audio samples of illegal robocalls.

If you get a suspicious email or phone call, the FTC recommends you “think critically” by asking yourself these three questions.

  • Who sent the message? If you don’t know them, don’t immediately trust them. Try to verify that the sender is who they say they are.
  • What do they want you to do? A red flag is if they’re trying to get you to download something or share your personal information.
  • What evidence supports their message? Don’t take their word for it. Fact-check their information from trusted, reliable and independent sources. If the information doesn’t hold up, don’t engage.

There are insurance policies that can help you recover if you are the victim of an online scam. Here are two options.

  • Personal cyber insurance. This coverage helps you recover from a direct financial loss from cyber attacks, such as ransomware and phishing schemes. Personal cyber insurance can be purchased as an endorsement to your renters, condo or home insurance, but it’s not available from all companies. It’s a good idea to ask your home insurance agent if it’s available.
  • Identity theft insurance. While this coverage won’t cover direct financial losses from cyber attacks, it will reimburse you for expenses to restore your identity if you are the victim of identity theft. You can typically purchase identity theft insurance from an insurance company, credit card company or identity theft protection services.

Source: on 2021-01-20 07:10:15

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