It is common to find stories about consumers committing insurance fraud, but you almost never hear about fraud on the part of insurers. Unfortunately, it can and does happen, leaving those who depend on their insurance without the coverage they purchased.
Several years ago, an executive with the disability insurance giant, UnumProvident, pleaded guilty to fraudulent activities. If it can happen in a big company, it could happen in any insurance company.
What are some examples of such fraud?
The National Association of Insurance Commissioners (NAIC) is the organization state regulators use to set insurance standards and best practices. It also provides regulatory support in the insurance industry.
The NAIC knows a few things about insurance fraud. It reports that the following examples of insurer fraud occur commonly:
- Premium diversion. Keeping policy-holder premium payments, collecting premiums and selling insurance without a license
- Bogus policies. Dishonest agents sell phony policies, never intending to pay claims
- Non-insurance products. Disguising non-insurance products (health sharing plans, etc.) as a form of insurance
The Federal Bureau of Investigation (FBI) has also weighed on insurer fraud. It reports that fee churning in which several parties take commissions from paid insurance premiums until nothing remains to pay claims.
The NAIC recommends watching out for the following indicators of possible insurer fraud:
- Policies priced much lower than others on the market
- Aggressive sales tactics or pressure to purchase immediately
- Difficulty finding contact and company information about insurers
While wrongdoing can occur with any insurance (auto, health, life, long-term care, etc.), disability insurance fraud can be devastating. It prevents you from collecting on your claim at a time when you are in the greatest need.
If you suffered financial harm from a fraudulent disability insurance company in Colorado, consider exploring the possible legal remedies at your disposal.