Understand Insurance: Types of insurance fraud

  • Hard fraud: Hard frauds are illegitimate claims made with the intention of gaining easy money.
  • Soft fraud: Soft frauds are legitimate claims but the claim amount is more than the actual loss suffered. This is the most common type of insurance fraud as people like to take advantage of every situation at hand.
  • False claims: False claims is a situation when a claim is made on account of a loss that has not happened at all. This falls under the hard fraud section. For example, if a person damages his own vehicle and stages it as an accident damage to claim through the policy, it is a clear case of false claims. Agents need to be aware and cautious about these types of insurance fraud.
  • Over-rated claims: Over — rated claims occur when the loss has happened and the source of loss is also genuine but the claim amount surpasses the damage amount. This falls under the soft fraud section. For example, a house is destroyed in an earthquake. If the insurance company has over-valued the house, the compensation will be more than the damage.
  • Life-insurance frauds: Life insurance is one of the most common type of insurance policies that people buy. However, life-insurance fraud occurs when a person tried to fake death in order the claim from the insurance company. This falls under the hard fraud segment.
  • Premium diversion: Premium diversion occurs when the insured pays out the premium but it does not reach the carrier. Literally, agents collect premium but do not pass it on the carrier. Later, they refuse to pay the claims on account of non-payment of premium amount.
  • Fee churning: Fee churning is when an insurance agent moves from companies to companies looking for a better commission rate. This increases the premium amount to be paid by the customer.



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Agency Height

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Agency Height is an insurance blog that offers insurance agents content about the insights and queries of the industry to make their work more efficient.