Auto insurance fraud is very real, with thousands of cases being submitted daily (Car Documentary Videos, 2013). In order to understand what auto insurance fraud is and how it affects a population or society, it is necessary to not only define and describe the process, but to make the concept one that is easily relatable. By working to understand insurance fraud it becomes necessary to understand the subsequent consequences and influences, enabling the matter to be addressed before the cost becomes too great.
Insurance fraud refers to the practice of providing false information to an insurance company for the purposes of gaining something of value, whether physical or monetary, that he or she would not have otherwise received (Car Documentary Videos, 2013). This can range from submitting a claim with falsified documents all the way through staging an accident or even pretending that more people were in the car than were actually present. Individuals will attempt to falsify data in any way possible to ensure that they are able to gain additional recompense that they would not have otherwise received.
Looking to the Robin Hood case study, wherein the Band of Merry Men is portrayed as a company that Robin Hood is responsible for managing, there are several potential actions discussed that would serve to parallel that of auto insurance fraud. Robin Hood is portrayed as a person who is attempting to get resources that he would not have otherwise received during normal activities. All of these different activities are centered on the premise of staging thefts for the purpose of collecting wealth from those who are wealthy for the purpose of redistributing that wealth to those who need the funds due to increasing costs of living in the area (Cullen, n.d.). The unfortunate result of such a situation is, however, that as the scheme is identified, the tactics will change (Car Documentary Video, 2013; Cullen, n.d.). As in the case of Robin Hood, wherein the marks realized the scheme and started traveling different routes, so too are insurance companies adjusting their tactics, determining the scheme and then redirecting their efforts in alternative ways.
An insurance company is able to mitigate fraudulent claims by working to investigate the different accidents that occur and reviewing the claims carefully to determine the likelihood that such claims are faked, taking this information, and mapping it to identify areas of increased likelihood for fraudulent claims. Those claims are then logged for additional review to determine legitimacy. The main issue arises, however, with whiplash claims. There is no way for a doctor to prove that whiplash has occurred; he or she must simply trust the individual’s word on the matter (Car Documentary Video, 2013). Once the individual has seen a doctor, that doctor has given the patient the benefit of the doubt, as there is no way to determine the accuracy of the claim (Car Documentary Video, 2013). The insurance company, upon the receipt of the doctor’s information must look at this the way the courts would; if the claim was not paid, the individual could sue and win as a result of the fact that the doctor has signed off. As such, the insurance company simply pays off on the claim, as it is less costly than to go to court (Car Documentary Video, 2013). As there is no way to investigate such claims and as a result of the fact that personal injury claims are on the rise, the costs are simply passed along to the insured in the form of higher premiums, creating a vicious cycle that serves to only hurt those that attempt to take advantage of the system. While it is clear that there is still much to be done to work to mitigate the presence of such claims, it is likewise clear that the system will be unable to effectively support the continued use of such schemes as well.
- Car Documentary Video. (2013). The Great Car Insurance Swindle – BBC Car Documentary. YouTube. Retrieved 7 October 2015, from https://www.youtube.com/watch?v=i9e7vu9QtVE
- Cullen, T. Robin Hood, Inc. (pp. 1-3). Cornell University.