Insurance Fraud and its Perpetration Essay Example | Topics and Well Written Essays - 1750 words

Insurance Fraud and its Perpetration - Essay Example The individuals who are mostly found engaging in hard fraud include company executives, as well as employees. A corporate worker who engages in fraud will typically choose to defraud the insurance firm by taking bribes from physicians to validate false claims. Insurance agents could also participate in defrauding an insurance firm by not forwarding policyholder premiums to it, and instead of pocketing them while hoping that a claim is not filed by the policyholder. Hard fraud could also be perpetrated by con artists who create fake insurance firms and then proceed to collect premiums from gullible consumers. Such con-artists almost never pay claims. Once the numbers of claims being filed by policyholders reach a certain number, the defrauders will vanish with the company assets. Soft fraud is also referred to as opportunity fraud and takes place when a claimant overstates a genuine claim. For instance, a car owner who is involved in a minor incident where there is a ‘fender bender’ problem can exaggerate the claim (Karamouzis and Hallawell 2005). Soft fraud can also take place in the course of the underwriting process when consumers are invited to renew their coverage. In such an instance, the claimants could offer false information for the purpose of lowering the insurance premiums; thus increasing the possibility of their applications being accepted (Pontell 2005b). For instance, they could provide false information on the car’s mileage, provide a false garage location, or even add to the number of items that may have been stolen, in incidences of theft. The UK Fraud Act of 2006 actually strengthened the existing law on insurance fraud. It included the notion that people would be charged with fraud if they used fake representations, or even refrained from disclosing important information (Hoyer, Zakhariya, Sandner, and Breitner 2012).