Insurance Fraud

Insurance fraud is a dishonest act committed with the intent to deceive an insurance company for financial gain, much like a dishonest traveler fabricating tales of loss to receive undeserved aid. It can take many forms, including submitting false or inflated claims, misrepresenting facts to obtain coverage, or staging accidents to collect benefits. Insurance fraud is harmful to both insurance companies and policyholders, as it increases the cost of insurance and undermines the trust essential to the industry.

Example

A car owner intentionally sets fire to their vehicle and then files a claim with their insurer, stating that the fire was an accident. If the insurance company pays the claim without detecting the fraud, the car owner would receive an undeserved payout. To combat insurance fraud, insurers invest in advanced analytics, data sharing, and other anti-fraud measures to identify and prevent suspicious claims and protect honest policyholders from the financial impact of fraudulent activities.