Premediated vs. Opportunistic Insurance Fraud

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There are two types of insurance fraud, premeditated and opportunistic. Understanding what those are and the different methods criminals use to attempt to defraud the insurance industry is key to mitigating the fraud.

Premeditated Fraud

Premeditated insurance fraud is planned ahead of time and typically involves an interconnected group of individuals, known as organized crime networks, all working together to defraud the insurance industry for financial gain. Unfortunately, this type of fraud includes those with a duty to act with integrity, such as healthcare clinic owners, registered healthcare practitioners, lawyers and more, which can result in victims not receiving the healthcare they need.

In Équité’s experience, members of the network will have in-depth knowledge of the insurance industry and be in a position of power such as a tow truck driver or registered healthcare practitioner. These organized crime networks will often victimize people at their most vulnerable including just after a vehicle collision, and collude to bill insurers for products and services never provided.

In an example of premeditated fraud, a healthcare clinic owner colludes with a tow truck company to send individuals who have been in vehicle collisions to the clinic. The clinic falsifies records claiming the individual is more injured than they are and therefore needs costly assessments, delaying necessary and timely access to treatment.

When these healthcare providers falsify or exaggerate records to perpetrate a fraudulent claim to an insurance company it affects the injured individual. The individual may not receive the full benefit that should be available to them to assist in their recovery due to overbilling that exhausts their policy limits.  Also, those falsified or exaggerated records permanently remain in the victim’s medical history. This can have a negative impact when the victim applies for life insurance or some other kind of insurance without knowing about the falsified medical history. These records could lead to policy refusal, higher premiums or claims denial based on the falsified or exaggerated records of injuries made up by the healthcare provider.

Opportunistic Fraud

A majority of the fraud that our Équité Association investigators are seeing is opportunistic insurance fraud. This is an exaggeration of a legitimate claim; it is typically difficult to spot and therefore a common target for fraudulent service providers. However, Équité’s expert investigators have access to data, trends and investigative techniques that can spot the fraud in the numbers.

In an example of opportunistic fraud, a vehicle is in a minor collision, and the auto repair shop sees this as an opportunity to exaggerate damage claims to bill the insurer for goods and services that are not needed or provided. The vehicle owner signs a blank form, after being assured the auto repair shop will fill it in after all repairs are assessed. In return, the auto body shop lists many items that need to be repaired or replaced that have nothing to do with the original collision claim.

In this scenario, honest drivers are unknowingly paying through their premiums for this auto body shop to receive money fraudulently. This causes a loss of trust in the system meant to protect individuals in times of need and drives up the cost of insurance, particularly for the individual with the exaggerated claim. Driver awareness of insurance fraud, like exaggerated claims billing, could mitigate this type of insurance fraud. Check out our Anti-fraud Checklist to learn how to keep track of your accident benefits.

Whether the insurance fraud is opportunistic or premeditated, it’s important to be aware that insurance crime always has a victim. It has real physical, emotional and financial consequences. This is why Équité, on behalf of our members, brings together the collective expertise of our industry to prevent insurance crime and protect Canadians.

Insurance crime is not a victimless crime, and Équité believes it is time we eradicate these crimes from Canada. In 2023, Équité partnered with Crime Stoppers to make it easier for Canadians to report insurance crimes. The Crime Stoppers tip line is available 24-hours a day, seven days a week. For those who prefer to submit tips online, click here. Both options are anonymous and confidential for tipsters.

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