What Does Insurance Fraud Look Like?

Last updated: March 29, 2016

Many Things Can Count as Insurance Fraud

It occurs when someone tries to make money from insurance transactions by deceiving others. Insurance fraud is a criminal offense in Kansas. The following list highlights examples of insurance fraud along with a brief description.

Insurance fraud falls primarily into two categories: internal and external.

Internal Fraud  

Internal fraud are those perpetrated against an insurance company or its policyholders by insiders. These insiders are insurance agents, managers, executives, or other insurance employees. Examples include:

  • Fake/False Documents -- Agent or insurer issuing fake policies, certificates, insurance identification cards, or binders.

  • False Statements -- Agent or insurer making a false statement on a filing with the Kansas Department of Insurance.

  • Pocketing Premiums -- Agent or insurer pocketing premiums, then issuing a phony policy or none at all.

External Fraud

External fraud schemes are direct against an insurance company by outsiders. These individuals are policyholders, medical providers, beneficiaries, vendors, chiropractors and career criminals. Examples include:

  • Arson-for-Profit -- Someone deliberately burns a business, home, or vehicle to collect insurance money.

  • Disaster Fraud -- Unscrupulous operators persuade disaster fraud victims to claim more damages than actually occurred. They could also collect money to repair damaged property but never complete the work.

  • Creating a Fraudulent Claim -- Creating a fraudulent claim may include:

    • Staged or caused auto accidents;

    • Staged slip and fall accidents;

    • False claim of foreign object in food or drink;

    • Faking a death to collect benefits, or filing a phony death claim;

    • Murder-for-profit;

    • Phony burglary theft or vandalism;

    • Arson;

    • Staged auto thefts; and

    • Staged homeowner accident or burglary.

  • Exaggerated Claims (Overstating the Amount of Loss) -- The most common perpetrators of fraud are the occasional "fibbers" or "padders". They overstate their insurance claims to make up for the deductible. Consumers pay billions of dollars annually to cover these little exaggerations. Overstating the amount of loss can include:

    • Inflating bodily injuries from an auto accident;

    • Inflating value of items taken during a burglary or theft;

    • Inflating a physical damage claim from a minor fender bender; and

    • Medical providers inflating billing or upcoding of medical procedures to name a few.

  • Falsifying Theft Reports -- A property owner falsely reports items stolen or exaggerates the values of items taken in a burglary to collect insurance money.

  • Medical Fraud (Medical Mills) -- Unethical medical practitioners or providers work in concert with scheming patients. Then they create fictitious, accident-related injuries to collect on:

    • Fraudulent disability,

    • Workers compensation, and

    • Personal injury claims.

    • These providers usually work through middlemen who recruit patients for their scams. The doctors also often bill insurers for multiple office visits and tests which never take place.

  • Misrepresenting Facts to Receive Payment

    • Claiming prior damage occurred in the current accident;

    • Claiming a minor injury created a partial or total disability;

    • Receiving disability payments while working elsewhere conducting the same or similar work duties;

    • Claiming false disability;

    • Medical providers billing for services not rendered;

    • Providing unnecessary medical treatment;

    • Charging for non-provided medical tests;

    • Pharmacist "upcoding" for medicine by issuing generic pills and charging for name brand.

  • Past Posting -- "Past posting" is trying get a claim to pay out for a accident when the insurance was not in effect

    • This occurs when a person becomes involved

      • In an automobile accident,

      • Victim of a car theft, or

      • Finds themselves with a property loss and no coverage,

    • The victim may take the simple approach of going directly from the scene of the accident or theft to an insurance agency. They may create an elaborate scheme of events to prove the insurance was in effect. The key is the coverage must appear to have been in force at the time of loss.

  • Personal Injury Schemes (Slip & Fall) -- A corrupt attorney reports his client was seriously injured after falling on commercial property. And they demand the business's insurance company be notified. The business owner has no prior knowledge of anyone falling and has never seen the claimant. The fall was staged or fabricated, and there was no such injury. These con artists often target small businesses or franchise operations.

  • Property Fraud (Multiple Policies for Profit) -- A property or vehicle owner illegally buys numerous insurance policies for one property or vehicle. After, he or she damages or destroys it, collecting on all policies.

This article is published on KansasMoney.gov. Find more information by contacting these state agencies: