What types of fraudulent schemes are perpetrated by those in the insurance field?
AHIP (America’s Health Insurance Plans)
Agent and Broker Fraud
Misrepresentations on applications
A man tells an agent filling out an application for him that he is a smoker. The agent intentionally fails to note this on the application so that the man will get a better rate.
Misrepresentations of coverage
Agent Carson deliberately and falsely tells an applicant that her family history of high blood pressure and heart disease and her prior treatment for irregular heartbeats will have no bearing on the issuance or rating of the policy.
Improper replacements, including churning and twisting.
Churning occurs when an agent or broker replaces the coverage of his own current clients without regard to need in order to earn a new commission. Twisting occurs when an agent or broker targets new prospects for the purpose of replacing their existing coverage without regard to need in order to earn a commission.
Agent Miller changes her affiliation to another insurer. She persuades many of her clients to get new policies from her new company by telling them that the coverage it offers is superior. This is not really so — Miller just wants to earn new commissions. (Churning)
Broker Harlan targets clients of other agents and brokers. He tells them that the coverage he offers is better than what they have. Again, this isn’t true — Harlan too just wants to earn new commissions. (Twisting)
Insurer Employee Fraud
Insurance company employees are in a unique position to manipulate information in applications and claims. Home office employees also have access to automated billing systems and computer databases. Consequently, opportunities for employee fraud are abundant.
http://www.ahiphiwire.org/Broker/LearningCenter/Feature.aspx?doc_id=147191
Comment:
By Don McCanne, MD
In a single payer national health program enrollment is automatic and permanent. Churning, twisting, misrepresentations of coverage, and falsified applications wouldn’t even exist.
