| Insurance fraud is any act committed with the intent | | | | The types of insurance fraud that exist are as |
| to fraudulently obtain payment from an insurer. | | | | diverse as the types of insurance policies that are |
| Insurance fraud has existed ever since the beginning | | | | available. Some of the major areas in which insurance |
| of insurance as a commercial enterprise. Fraudulent | | | | fraud occurs are in the life, health care, automobile, |
| claims account for a significant portion of all claims | | | | and property insurance industries. |
| received by insurers, and cost billions of dollars | | | | An example of life insurance fraud is the John Darwin |
| annually. Types of insurance fraud are very diverse, | | | | disappearance case, an ongoing investigation into the |
| and occur in all areas of insurance. Insurance crimes | | | | faked death of British former teacher and prison |
| also range in severity, from slightly exaggerating | | | | officer John Darwin, who turned up alive in December |
| claims to deliberately causing accidents or damage. | | | | 2007, five years after he was thought to have died |
| Fraudulent activities also affect the lives of innocent | | | | in a canoeing accident. Darwin was reported as |
| people, both directly through accidental or purposeful | | | | "missing" after failing to report to work following a |
| injury or damage, and indirectly as these crimes | | | | canoeing trip on March 21, 2002. He reappeared on |
| cause insurance premiums to be higher. Insurance | | | | December 1, 2007, claiming to have no memory of |
| fraud poses a very significant problem, and | | | | the past five years. |
| governments and other organizations are making | | | | Insurance fraud can be classified as either hard fraud |
| efforts to deter such activities. | | | | or soft fraud. |
| The chief motive in all insurance crimes is financial | | | | Hard fraud occurs when someone deliberately plans |
| profit. Insurance contracts provide fraudsters with | | | | or invents a loss, such as a collision, auto theft, or |
| opportunities for exploitation. One reason that this | | | | fire that is covered by their insurance policy in order |
| opportunity arises is in the case of over-insurance, | | | | to receive payment for damages. Criminal rings are |
| when the amount insured is greater than the actual | | | | sometimes involved in hard fraud schemes that can |
| value of the property insured. This condition can be | | | | steal millions of dollars. |
| very difficult to avoid, especially since an insurance | | | | Soft fraud, which is far more common than hard |
| provider might sometimes encourage it in order to | | | | fraud, is sometimes also referred to as opportunistic |
| obtain greater profits. This allows fraudsters to make | | | | fraud. This type of fraud consists of policyholders |
| profits by destroying their property because the | | | | exaggerating otherwise legitimate claims. For |
| payment they receive from their insurers is of | | | | example, when involved in a collision an insured |
| greater value than the property they destroy. | | | | person might claim more damage than was really |
| Insurance companies are also susceptible to fraud | | | | done to his or her car. Soft fraud can also occur |
| because false insurance claims can be made to | | | | when, while obtaining a new insurance policy, an |
| appear like ordinary claims. This allows fraudsters to | | | | individual misreports previous or existing conditions in |
| file claims for damages that never occurred, and so | | | | order to obtain a lower premium on their insurance |
| obtain payment with little or no initial cost. | | | | policy. |