Anyone involved in the insurance process can commit insurance fraud whether it be the insurance company, the agent selling the policy, an insurance claims adjuster, or even the consumer.In the widest scope of the meaning, insurance fraud is when one of those people or entities intentionally deceives another for illegitimate gain. It can happen anywhere in the insurance process pipeline from buying and using insurance to the acts of selling and underwriting the policies., The FBI estimates that the total costs of insurance fraud exceed $40 billion each year.Most of these costs are past along to consumers because insurance companies have to raise premiums on all policies in order to cover the losses incurred by fraudulent activity.


The FBI has calculated that this costs the typical U.S. household an additional $400 to $700 in increased premiums every year., One of the most common forms of insurance fraud, premium diversion is when insurance premiums are embezzled.Typically, premium diversion happens when an insurance agent collects premiums for personal gain without passing them along to the policy underwriter.This means the consumer believes he or she is paying the monthly premium without realizing that the money has been diverted.


Another form of premium diversion comes when an unlicensed individual sells fake policies and collects the premiums without any intention of ever paying claims.Beware of policies with significantly lower rates than any other competitors since this is a tactic used to draw in consumers., Consumer insurance fraud comes in a wide array of activities simply because of the different varieties of insurance available to consumers. Most people picture the intentional staging of accidents, injuries, arson, thefts, or other losses covered by a policy.While these instances absolutely constitute insurance fraud, other less-extreme examples include:

Exaggerating a legitimate claim for personal gain, such as the extent of an injury to claim disability.
Deliberately providing false information or leaving out true information on a policy application, such as lying about a terminal illness on a life insurance application.
Whether the insurance is medical, life, disability, auto, homeowners, or even crop insurance for farmers, you can find examples of these various types of consumer insurance fraud across the whole spectrum of insurance types available.
 Claims adjusters review insurance claims on behalf of companies or individuals to determine that actual liability of the insurance company on a given claim. Fraudulent adjusters can collect a fee to review your claim without any intention of following up, refer your repairs to unlicensed or poor contractors, and falsify or inflate claims that go against your insurance policy.Each of these examples constitutes insurance fraud.


While consumer fraud most commonly defrauds the actual insurance company, adjuster fraud can cost consumers, insurance companies, or both.
Learn what constitutes insurance fraud.
Understand the effects of insurance fraud.
Learn the types of premium diversion.
Identify forms of consumer insurance fraud.
Identify forms of claims adjuster fraud.
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