Insurance Fraud

Topics: Insurance, Fraud, Insurance fraud Pages: 6 (1713 words) Published: April 18, 2013
Thalita Correa
ID# 12260002
Prof. Robert I. Elan

Insurance Fraud

The early warning signs of fraud are, usually, always ignored. There are warning signs for every type of fraud out there. To understand the warning signs of fraud, we must first know what fraud is. Fraud is the intent to trick someone or lie to someone in order to receive financial gain. This definition varies depending of the type of fraud used, but the person committing the fraud is always looking for financial gain. There are many types of fraud out there. You have internet fraud, mortgage fraud, loan fraud, tax fraud, embezzlement, forgery, insurance fraud, and marriage fraud. These are only a few types of fraud. There are many more types of fraud out there and new types of fraud are being committed every day. This paper will focus on insurance fraud in particular. Insurance fraud will lead into a discussion of what the fraud is, how it happens, what are the warning signs of the fraud, and what you can do to protect yourself.

Chinese and Babylonian traders practiced the first methods of transferring or distributing risk as long ago. Chinese merchants travelling treacherous river rapids would redistribute their wares across many containers to prevent loss due to any singe containers spoilage. The Babylonians created a system that recorded in the famous code of Hammurabi. If a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lender's guarantee to cancel the loan should the shipment be stolen. Achaemenian monarchs were the first to insure their people and made it official by registering the insuring process in governmental notary offices. The insurance tradition was performed each year in the beginning of the Persian year, the heads of different ethnic groups as well as others willing to take part, presented gifts to the monarch. The most important gift was presented during a special ceremony. When a gift was worth more than 10,000 gold coins the issue was registered in a special office. This was advantageous to those who presented such special gifts. For others, the presents were fairly assessed by the confidants of the court. The purpose of insurance was and still is to protect you from managing the risks from relatively rare events risk free from your pocket. Without the protection of insurance policy any catastrophic affair would be a huge burden in any individual who wouldn’t be able to cope with costs that would be too much to handle. Hundreds of thousands insurances are currently in process today. In NYC 50% of all car insurance opened are closed within the first few months, tough it’s illegal and irresponsible for driver and the public. Most of the country owns limited health insurance, which is barely helpful for most low income families. Most people own different insurance, some own none. There’s rental insurance, cars, pets, lives, pretty much anything you want to insure you can now-a-days. Like any other service fraud can occur. Being from a corporate or an individual, fraud can pass by without taking notice from authorities. Corporate fraud is when an individual or group within the company violates the laws in order to gain monetary status for that individual or company. Internal corporate fraud can be broken down into two different types. The fraud can be for the company or against it. Corporate fraud has been the recession gaining in numbers for the past few years. One reason is believed that “the recession”. Major corporations are trying to find ways to cut down on their budget to see their business prosper once again or to continue to prosper. With budget cuts in corporations this could mean, “Staff may now feel a reduced level of loyalty to their employer”. All an employee needs to commit fraud is, “Greed, Opportunity, Need and the Expectation”. Fraud can occur in a company because internal controls are not monitored often enough. There may be a need of...

Bibliography: "Insurance Fraud." 03 Apr 2013
“Regulatory guidelines” 03 Apr 2013
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“Superior Insurance Services” 15 Mar 2013
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