Insurance is intended to have your back in the event that something goes wrong, but some individuals have found loopholes in the system, effectively turning insurance companies into their own personal banks. These scammers have long been known to engage in â€œslip and falls,â€ claiming â€œwhiplash,â€ and engaging in elaborate scams that can take years to uncover and cost insurance companies millions.
Auto insurance scams are some of the most prevalent in the insurance industry, allowing fraudsters to easily obtain policies and take advantage of the â€œhe said, she saidâ€ nature of auto accidents.
Here are five major scams plaguing the industry:
1. Ghost brokers: Even in such a heavily regulated industry, scammers are able to pose as legitimate insurance agents, offering steep discounts on consumer policies that are, in fact, worthless.
2. Crash for cash: These are typically rear-end accidents in which the victims unintentionally crash into the scammers. â€œCrash for cashâ€ scams often occur at roundabouts or rotaries, intersections, and highway on-ramps. See the UKâ€™s top crash for cash hotspots.
3. Soft tissue scams: Scammers may collude with physical therapists, chiropractors, and doctors to fake back pain, neck pain, and other hard-to-prove injuries that canâ€™t be detected on an X-ray.
4. Staging scams: Generally, in this type of scam two or more cars are involved in a preplanned â€œaccident.â€ The participants have agreed ahead of time to split the proceeds from repairs and injuries.
5. Phantom victims: After either a staged or legitimate accident, people who were not present at the incident are included in the claim.
In most cases, scammers file their fraudulent insurance claims online. The criminals who perpetrate these sorts of online scams tend to repeat their trick over and over, generating a pattern that can easily be detected by iovationâ€™s device reputation service. This service spots online evildoers by examining the computers, smartphones, and tablets being used to connect to a website. If a device is recognized as having previously committed financial crimes, or is a new device but exhibiting high-risk behavior, the website has the opportunity to reject the transaction, preventing losses to the business before they occur.