By and large, insurance is a good benefit. We as human beings are imperfect. Any one of us can suddenly be involved in unforeseen occurrences. Having specific insurance coverage for those unforeseen occurrences provides some peace of mind. In an ideal world, insurance coverage would be available to those individuals who have gone through legitimate unforeseen occurrences, and those individuals would all feel comfortable that they have been made whole.
Those of us who are in the insurance defense world know that insurance coverage is not perfect. There are individuals who can and do find ways to exploit insurance coverage. Abuses with insurance happen with every type of coverage. Worker’s compensation, auto insurance, homeowner’s insurance, and even life insurance are not immune to misuses. Individuals who receive benefits from exaggerated or completely false claims can often become problematic for insurers down the road. To the insurer, there is a risk of future exaggerated or false claims from the same individual. I’m sure we can all recall several instances of individuals who have filed more than one questionable claim.
Furthermore, when an individual receives payment on an exaggerated or false claim, others tend to take notice. Co-workers, friends, family members, and other members of the general public can look for ways to similarly exploit the insurer. API, through its investigations, has documented instances of all the above examples.
When a culture of lax claims oversight develops, it can spread like wildfire. Insurers, prudently so, should take steps to reverse this culture or prevent it from developing in the first place. How can it be prevented? The simple answer is to not allow exaggerated and fraudulent claims to be compensated. In order to prevent these claims from being improperly compensated, a thorough examination, and oftentimes, investigation is a necessary component. For insurance defense cases, there are several types of investigations which can be utilized. Background investigations, social media/open source investigations, surveillance, statement/interviews, and premises documentation/examination are just a few of the investigation types API offers to assist insurers in determining legitimacy of claims.
Changing the claims culture, particularly in the initial stages, can and should be considered an investment. One claim may not initially yield any savings or recovery of funds. However, properly addressing that claim along with future claims is the key to sending the message to would-be fraudsters.
It is in our human nature to not reward bad behavior. On the other hand, it is also in our human nature to choose bad behavior when we are rewarded for it. Claims, like human behavior, should be properly addressed and resolved. In the insurance world, sending the right message is beneficial not only to the insurer, but to the pool of insureds as a whole.