Medical Isurance Fraud Essay

2491 Words Aug 25th, 2015 10 Pages
Insurance Fraud

The term "insurance fraud" covers a wide array of activities that have the same basic purpose: to obtain payment from an insurance company by deceptive or dishonest means. While incidence of fraud is estimated to be low, it remains an area of great concern for insurers.

Losses Due To Fraud

As with most crimes, it is impossible to accurately gauge losses to fraud because only that which is detected is measurable, and the typical suggestion is that the "true" value may be significantly greater than the measurable value.

With that in mind, it is (gu)estimated that 10% of insurance payments are attributable to fraud - which is again an entirely arbitrary number - and the cost of losses are ultimately borne by the
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Hard and Soft Fraud

The top-level classification of fraud divides it into hard fraud and soft fraud:

Hard Fraud involves staging or inventing a loss to collect a cash settlement from an insurer. This is generally a crime of opportunity, though in some instances a fraudster may plan in advance to obtain a policy with the intention of later staging a loss.

Soft fraud involves exaggerating the value of an otherwise legitimate claim. It is generally done when a loss has occurred, and an insured seizes upon the opportunity to profit by claiming more extensive (or expensive) losses than actually occurred. However, it can also be done in advance by intentionally misstating the value of items as more than their actual worth.

The classification of a fraud as "hard" or "soft" has little to do with the prosecution of fraud: the penalties for fraud depend more upon the severity of the crime (the value the fraudster attempts to obtain) and the intent of the fraudster to deceive their insurer.

Fraud By Coverage Type

Another method for classifying fraud is to relate it to the type of coverage, as different techniques are used to file claims against different kinds of coverage.

Disability Insurance Fraud

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