10 Techniques Insurance Agents Use to Spot False Claims

Contrary to popular belief, insurance fraud is more prevalent in the United States. And the perpetrators are becoming more inventive. While there are many popular scams out there, such as pretending you lost an expensive piece of jewelry and then filing a claim, con artists also stage car accidents, for example, to defraud victims.

For instance, a driver in front of you might stop quickly in an effort to strike you; if you do, he’ll pretend to be hurt. Or, someone might create a fake title or registration for a fancy or antique car that doesn’t exist (but would cost a lot of money), then declare the vehicle stolen and submit a claim.

According to the Coalition Against Insurance Fraud, these scams cost Americans at least $80 billion annually and affect all types of insurance, including health insurance, property insurance, vehicle insurance, and workers’ compensation. Even though 78 percent of Americans say they are concerned about insurance fraud, some people think that small-scale fraud, like padding a claim to satisfy the deductible you must pay, is acceptable.

Insurance fraud may be rampant, but it isn’t going unnoticed. Insurance companies are continually attempting to prevent fraud through a number of techniques, such as the application of artificial intelligence (AI). Check out these 10 ways that a false claim might be examined before considering filing one. And if you’re proven guilty, you might face a big fine or time in jail.

Review the Claims History

Submitted numerous claims or asserted numerous losses during the course of your lifetime? Those are obvious warning signs, and whatever you provide will be carefully reviewed. When it comes to auto and homeowner’s insurance, this is especially accurate.

Additionally, insurers look for any patterns in the frequency and kind of your prior claims. Insurance firms maintain extensive records on claims and use a variety of analysis to understand the data they contain. These analyses range from identifying who is most likely to file a claim to determining when and where. They’ll notice if your claim deviates from the usual trend.

9: “Suspicious Loss Indicators” Checklist

Did you even know there was a National Insurance Crime Bureau (NICB)? This organization has created a top-secret list of 23 “suspicious loss indicators.” These are characteristics of a claim or its context that suggest the claim might be false. Bogus. a con job. Okay, so the list isn’t truly “super-secret,” but many of the people making false claims are unaware that it exists and could be used against them.

Here are just a handful of the warning signs of a suspicious loss that insurance agents watch out for:

  • A claimant who submits a significant claim and is completely composed and unnerved
  • Anyone filing a claim who provides handwritten invoices for repairs made to a covered item
  • A claimant who shortly before filing a claim increases or adds homeowners’ or car insurance coverage
  • A claim for fire damage to a home or car where the fire began right after
  • A family fight or soon after family members left the house/car
  • A medical claim made by a temporary worker whose employment is ending

Of course, a few of these possibilities could be found in actual claims. But do not fret. Insurance companies are aware that while these signals are not conclusive proof of fraud, they are signs that certain claims warrant additional investigation.

8: Use private detectives

After a car collision, you frequently see people pretending to have whiplash in movies. After making a false statement to the police, the film switches to the person at home, without the large foam collar, performing an athletic activity that would be impossible if they actually had whiplash. The next image shows a private eye hiding in the bushes taking a picture of the “victim” before fleeing.

That isn’t simply reserved for Hollywood. Insurance claimants are occasionally followed by private detectives for just these reasons. They also employ less dramatic strategies to detect fraud, such as investigating the backgrounds of claims by looking through criminal records, speaking with claimants and any witnesses, and examining relevant places.

While some insurance companies use freelance private investigators, many employ PIs and frequently choose those with experience in both law enforcement and private investigation.

7: Look for Personal Injury Proof Mills

One of the more well-known insurance fraud schemes involves car accidents that cause both real and phony/exaggerated injuries. There are several ways the con can operate. Imagine that your back hurts after a vehicle accident. You see the chiropractor, who improperly bills your insurance for injuries that never happened. Then, possibly, attorneys will intervene and convince you to permit them to begin settlement talks based on your “severe” injuries. Unknowingly, you find up taking part in the con. Other times, scammers invite accident victims to take part in their scheme in exchange for a share of the money.

Certain medical professionals or lawyers who engage in such practices frequently repeat the same scam. Insurance companies should be wary if a physician repeatedly files claims for accident victims who concurrently undergo the same course of therapy.

6: Use Cutting-Edge Computer Technology to Spot Suspicious Billing

Billing fraud happens frequently, and it happens for medical claims pretty frequently. For example, doctors or clinics may charge insurance companies for services that were never provided or for treatments that weren’t actually essential from a medical standpoint. Also possible are price hikes for specific services, multiple charges for the same service, or “unbundling” claims for three distinct surgeries on a patient whose three toes were operated on simultaneously. In order to identify suspect bills and billing trends from doctors and medical facilities, sophisticated computer systems have been developed.

Billing fraud, however, doesn’t just apply to medical claims. Another industry that is riddled with billing fraud is auto repairs. Some policyholders will ask their repair shop whether the cost of their deductible can be added to the bill when they learn that their automobile insurance would pay for the cost of restoring their dented hood after they have paid their deductible. Hint, hint, wink, wink.

Naturally, the majority of respectable stores will decline, but many are willing to cooperate. Alternatively, the businesses themselves may install a used bumper on your car and then charge your insurance for a new one. Once more, in these circumstances, computer systems of insurance companies may produce claims for repairs that seem exaggerated or are inconsistent with other claim data.

5: Send a hand-off to the Special Investigations Unit

Special investigative units, or SIUs, are commonplace among insurers. People who work with SIUs typically have experience in law enforcement, medicine, or other related fields. They can conduct a staggering variety of tests and checks to catch anyone attempting to commit fraud. A few examples of what they can achieve are as follows:

To identify whether a fire was started purposefully or by accident, analyze the burn patterns and do computer simulations on burned-out cars and houses.
Establish whether a claimant’s injuries correspond to a reported accident.
Look at damaged cars to check if the dents and scrapes that occur match the accident report. Use rust analyses and wear patterns to determine whether the damage to your car is indeed the result of a previous collision.
Perform an examination of claimants’ finances. When a person is late on their automobile or mortgage payments, their auto or homeowner claims are immediately identified as possibly false.

4: Examine the credit histories of potential hires

Insurance fraud is not just committed by outside parties. Some of it comes from the employees of the insurance firms themselves. For instance, claims adjusters write a lot of checks, and dishonest people can try to take a few dollars extra.

Agents are capable of committing fraud by “stealing” the life or auto insurance premiums of their clients. This frequent con involves a salesperson taking your insurance payment and pocketing it without ever ever getting you a policy. Smart insurance businesses carry out credit checks on all potential workers to try to stop this scam. Applications from people who have financial difficulties or poor credit are rejected because they are more likely to conduct fraud.


Insurers are already using social media to investigate questionable claims, much like the private detective who witnesses the allegedly bed-ridden claimant salsa dancing the night away. The person who claimed that his car had been damaged by hail may be boasting about his fraud on Facebook or Twitter or posting a video on YouTube that demonstrates how to manufacture hail dents on your car’s hood.

Who would be so courageous? For insurance firms, there are lots of customers. The largest use of social media in claims fraud, however, is in cases involving disabilities. When determining if a claimant is actually incapacitated, a short glance over their Facebook images and postings is frequently sufficient.

2: Request Public Support in Step

Insurance fraud is an issue that affects all insurance providers. It affects you too. Non-health insurance fraud costs more than $40 billion yearly, according to FBI estimates, which you pay for by paying annual premiums that are $400 to $700 higher than they would be if there were no fraud at all.

Outraged? Sure do hope you are, insurers. They’re also becoming more outspoken about requesting assistance from their clients by:

  • ensuring that all bills for medical care, auto repairs, etc. only include the services and repairs that were really provided
  • If you’re in a collision, call the police, file a report, and take pictures of the damage to both cars. This way, you’ll have evidence of what actually happened in case someone in the other car try to fabricate a claim.
  • Avoiding medical professionals that pressure you to submit a personal injury claim following an accident, even if you weren’t hurt. They might be working together in secret.

Perform cross-checks, first

A straightforward cross-check, in which the insurer looks for straightforward patterns in the checks it is sending out to cover claims, is one of the simplest ways for insurers to catch thieves. It’s a red flag if the same person is receiving multiple checks. The same goes for paying multiple large claims to the same address, regardless of the name on the check. It’s not really complicated, but it works.

Additionally, cross-checks aren’t restricted to an insurer’s database. An anti-fraud information system called ISO ClaimSearch receives all of the claims information from thousands of insurance companies, self-insured organizations, and third-party administrators. Insurance Services Office, Inc. developed the system, which handles liability, property, and car claims. Cross-checking a new claim against the 1 billion+ records in this database makes it simpler to detect staged accident rings, identify people who submit several claims for the same loss, and detect other scams.


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