Fraud în Insurance

CASE STUDY : Walton v Kirk

Abstract

Almost everyone is familiar with insurance fraud. We've all heard the stories of people who received millions after a car accident or the heartless insurance firm refusing to pay out to a widow on a technicality. Insurance fraud is one of the oldest types of fraud ever recorded, dating back to 300 B.C., when a Greek merchant sunk his own ship, in an attempt to cash in on the insurance, and drowned in the attempt.

The set-up of our research

The theme chosen for research approached is to study and to evaluate the role that insurance fraud generates in our society and how the individual feels about the several techniques used in order to protect itself from it. Research plays a crucial role in understanding this process and it represents one of the most important issues regarding the today’s society. In the following paper it will be presented several aspects of how to manage fraud and especially fraud in insurance as it constitutes the main topic of our research.

INTRODUCTION: FRAUD AS WE SEE IT:

Insurance fraud seems like it might be an easy thing to do. Fraud in its many manifestations (e.g., telemarketing fraud, insurance fraud, pyramid scheme investment fraud, various forms of securities fraud, fraud involving on-line auctions, identity theft fraud, business opportunity fraud, credit card fraud, prime bank investment fraud, immigration document fraud), and many other forms of white collar crime (intellectual property theft, computer hacking, currency counterfeiting, money laundering, the export of controlled goods and technology without a license), often involve people or interests in more than one sovereign state.

It can be said that it has been a problem for the insurance market from its early days and that today, when the economy is changing constantly, it becomes more and more important to meet the basic requirements of the claimer. Providing excellent customer service, manage the costs of claims as well as reducing their lifecycle are some of the main issues that need special attention. But in this business that is called the insurance market, the insurers have to respond in the quickest and fairly way to the policymakers and claimants. However, when we address the problem of fraud, we need to take into consideration the fact that it is rising continuously, and more and more countries are starting to take measures in order to stop, or at least maintain at a lower level this phenomenon. Thus, insurance companies try to battle fraud in a series of ways like ant fraud policy for Insurance, Risk Flags, Computer programs, The SIU department ( Special Investigation Unit), Employee training, Employee monitoring, etc,.

Consequently, to speak about this concept in a different way, we shall see the legal implications of what fraud insurance really is:

INSURANCE FRAUD. (a) A person commits an offense if, with intent to defraud or deceive an insurer, the person, in support of a claim for payment under an insurance policy:

(1) prepares or causes to be prepared a statement that:

(A) the person knows contains false or misleading material information; and

(B) is presented to an insurer; or

(2) presents or causes to be presented to an insurer a statement that the person knows contains false or misleading material information.

To be guilty of insurance fraud one must intentionally or knowingly present false or misleading material information to the insurance company.

For this reason, insurance fraud is seen as being very harmful as it can be seen all over the world: in Romanian insurance companies, countries from Europe, USA. Tough it is argued that this phenomenon is not being offered too much attention, aspect that made it spread.

Moreover, it is not easy to fight against insurance fraud. One of the solutions would be for the insurance companies to improve their efforts to detect and neutralize the policyholders of bad faith in their attempt to frame or to produce, intentionally, insured events, as well as into actions of removing the causes generating fraud, more precisely into drafting and adoption of control methodologies specific to each insurance company, creating new departments specialized in combating fraud in the insurance.

Origin: In order to present the problem of insurance fraud in a correct matter we took the liberty of analyzing this concept right from its beginning. Thus the word “fraud” comes from the Latin fraus-fraudis, being seen as the act of bad faith committed to obtain a profit. In the legislation in force in the insurance, fraud is not defined, and the specific facts of insurance that constitute the crime of fraud are not described.

The act of insurance fraud can reflect all crimes committed in a period in the security system on the national territory. The offense is "the fact that is assumed to be a social peril guilty as provided for criminal law”. It also implies committing any of the facts that the law punishes as crime consumed or as an attempt and participation in the commission as author, instigator or accomplice.