Insurance Fraud Advisory
INSURANCE FRAUD: Don’t Be a Victim
What Is It and How Do I Report It?
Each year, insurance fraud costs companies and consumers alike tens of billions of dollars. In order to better identify and reduce incidents of insurance fraud - and, most important, protect consumers - the National Association of Insurance Commissioners (NAIC) offers the following tips for identifying and responding to insurance fraud.
What Is Insurance Fraud?
Insurance fraud occurs when an insurance company, agent, adjuster or consumer commits a deliberate deception in order to obtain an illegitimate gain. It can occur during the process of buying, using, selling or underwriting insurance.
What Types of Insurance Fraud Are There?
Fake insurance companies defraud consumers by collecting premiums for bogus policies with no intention of paying claims. These "companies" might offer policies at costs that are significantly lower than competitors' prices or they might be difficult to reach by phone – if there is a listed phone number at all. Consumers should check in advance that they are dealing with a legitimate, licensed insurer before signing an application for a policy.
In Vermont, contact Company Licensing in the Insurance Division (802-828-2470), or e-mail complic@bishca.state.vt.us . You can also check the status of a company license on line.
Legitimate companies that are not licensed by the state to sell insurance might lead consumers to think they are selling "insurance" while evading state insurance regulations. A company selling a health discount plan might call their plan "insurance" when it is really an unregulated, non-insurance product. For example, an unscrupulous insurance agent might collect premiums from a customer without passing them along to the company. The consumer believes that their premiums are being properly handled while the insurance company thinks the policyholder is not paying their premiums and, therefore, cancels or nonrenews the consumer's policy. If you do not receive an insurance ID card or a copy of your policy in a timely manner, this could be an indication that your premiums have not been paid to your insurance company.
Consumers can also be guilty of insurance fraud. Deliberate attempts to stage an accident, injury, theft, arson or other type of loss that would be covered under an insurance policy; exaggerating a legitimate claim; and/or knowingly omitting or providing false information on an application for a policy are all examples of consumer insurance fraud.
How do I report a suspected incident of Insurance Fraud?
If you believe that you have been a victim of insurance fraud, or if you are aware of an instance of insurance fraud, it is important to:
Contact the Vermont Insurance Division's consumer services section to file a complaint against the insurance company. Call toll free: 1-800-964-1784, or go to Filing a Complaint on this website.
You can also visit http://www.naic.org/ and complete the form provided by the Online Fraud Reporting System (OFRS). Through the OFRS, the NAIC and state regulators are encouraging consumers to take a proactive role in identifying and reporting insurance fraud. Not only does this minimize future instances of insurance fraud, but it also reduces unnecessary insurance costs.
Stop. Call. Confirm.
If you are unsure about the insurance company or agent you are dealing with, STOP before signing any paperwork or writing a check; CALL your state insurance department - easily reached by phone; and CONFIRM the company or agent offering insurance is legitimate and licensed in the state.
For more information about Vermont auto, home, life and health insurance options, as well as tips for choosing the coverage that is right for you and your family, visit http://www.insureuonline.org/.
August 2008