Don’t be duped into thinking you can “spot” someone who will commit insurance fraud. The players are as vast and divergent as snowflakes on a winter’s day. In employee group benefits alone, the annual toll of theft is in the billions of dollars with 3-10% of claim submitted being fraudulent. Added to the problem of prevention is most individual claims are so small, it’s impossible to prosecute.
What we know
Ten percent of the population will never even consider theft, fraud, or other criminal behaviour. Another ten percent are always willing and able to seek out the angles and find a way to “game the system”. Then there is everyone in the middle, those who could be swayed either way. When an opportunity presents itself, they may be persuaded.
I have been studying fraud and fraud behaviour—people’s attitude toward insurance—for a number of years. My book “They’ll Never Know” was titled to reflect how people can convince themselves that:
1) they are not harming anyone,
2) they create an easy justification, an affirmative logic as to the why they need to do this,
3) the insurers can afford it (as though they are manufacturing money instead of charging customers premium),
4) they’re not hurting anyone,
5) no one will ever catch on to their behaviour, and
6) let’s not forget they’re smarter than the rest of us.
Real Life, Real People
Take a recent case where the perpetrator was a person in a primary care position, meaning she was responsible for other vulnerable adults. Perhaps the first mishap was an accident. A number inputted incorrectly, a service unintentionally submitted twice. Just a small amount that wasn’t caught.
Now the wheels are turning. Christmas is around the corner. A little extra money would go a long way to taking the pressure off. Who’s going to notice or miss a $90 claim here, $125 there. With the tools available she could scan and alter an existing invoice, change around the dates and voila, presto, easy peesy, claim submitted, money in the bank.
Small amounts add up quickly
Within less than three months, these minor claims, seemingly so insignificant in and of themselves, quickly added up to just under $3,000. Roughly a thousand bucks a month. $12,000 for the year. What happens when the theft isn’t caught in a reasonable timeframe? The claimant gets more brazen. The amounts go up the more the person gets away with it. $12,000 annually turns to $24,000 and within a few years we’re into the hundreds of thousands of dollars.
Not so insignificant anymore
Over the course of this time, the experience of those claims falls fully on the plan, causing the rates to increase. At this point no one is aware of how a certain portion of this is fraud. All we know is where there have been claims.
The Fallout
At this point, a typical owner would consider:
· Remembering that the majority of plans are 50-50% split, if they are going to accept the premium increase, how to break the news to the employees that they’ll paying more in premium.
· Perhaps the owner will cut back on coverage options. Shave the plan to save the cash. This results in those with real needs, suffering the loss.
· Year over year increases often cause employers to reconsider the “benefit” of the benefit plan and they terminate the coverage entirely.
Protecting on High Alert
This particular fraudster was caught, as a result of the due diligence of the insurer, within three months. Unfortunately, the $3,000 of theft was not enough for the authorities to prosecute, but she lost her job, her reputation, the trust of her peers. The claims were removed from the client’s experience results and the rates, at renewal remained stable.
It’s important to remember that a portion of the premium paid for coverage goes toward supporting investigative teams scoping out the fraudsters before they can rack up profits that rob others of the critical coverage they need.
Yes, it’s time to work with a professional who understand. Let’s have a conversation.
Reach out if you would like to explore your corporate benefit options, like:
· Reminders on Group Long-Term Disability insurance
· Reduce, even prevent workplace injuries with your benefit plan
· Reactive or Preventative strategies for Benefits
Note: From a human’s mind … this was written without the aid of Artificial Intelligence (AI)
Disclaimer: Please note that the information provided, while authoritative, is not guaranteed for accuracy and legality. The site is read by a world-wide audience and employment, taxation, legal vary accordingly. Please seek legal, accounting and human resources counsel from qualified professionals to make certain your legal/accounting/compliance interpretation and decisions are correct for your location. This information is for guidance, ideas, and assistance.
