Fraud and Insurance
One of the cornerstones of insurance is the principle of solidarity, which is based on sharing the damage among a large number of people who are threatened by the same risk, and who, in some way, respond to it together.
Fraud is a direct attack against the principle of solidarity and has detrimental effects for both insurance companies and the policyholders themselves.
To remain confident that insurance companies are acting correctly and that assets are protected, it is important to fight together against insurance fraud.
What is insurance fraud?
Fraud includes all actions carried out by policyholders to obtain a benefit that does not correspond to them or, equally, unlawful acts carried out by insurance companies or mediators against their customers.
In the first case, most policyholders who act fraudulently to obtain a benefit are not aware that they could be committing a crime under the criminal code. They justify their behavior with thoughts such as:
- “It’s reasonable for me to benefit by a little more than I am entitled to, it’s okay. At the end of the day, the insurance companies make a lot of money.”
- “I’ve been paying for insurance for several years now and haven’t made a single claim, it’s only fair that I get “my” money back. With the premiums, the insurer will have already made its profits.”
- “I will take advantage of this claim to have other previously damaged property replaced, upgraded and repaired.”
- “The insurer handles many claims and will not go into mine specifically.”
In the second case, there are companies or individuals who try to operate in the insurance market without being registered or duly authorized. It is important for the policyholder to bear in mind that these cannot carry out insurance activity without prior official authorization.
It may seem that in insurance fraud there is only one “beneficiary” (the offender) and one “injured party” (the insurance company). However, this is not so; fraud harms us all.
- It harms the policyholders, because they have to endure premium increases as a result of the criminal actions of a few others.
- It harms the fraudsters themselves, since the consequences of their actions can be very important and some of them are classified as crimes.
- It harms the insurer, due to the considerable losses it causes, both in terms of money, time and the means it has to use to prevent it. In addition, the inevitable rise in premiums causes, as a consequence, a loss of market share.
- It harms the insurance company sector, in general, as it gives it a bad image and it has to devote resources to resolving this situation.