How Does Insurance Fraud Occur?

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10th Feb 2022

Insurance is meant to protect against risks, not serve as a vehicle to enrich the insured. One of the downsides of insurance fraud is that the heightened cost of dealing with such problems is passed along by insurers to their customers in the form of higher premiums. According to the Federal Bureau of Investigation (FBI), there are three (3) ways insurance fraud occurs:

Premium diversion
Premium diversion occurs when a business or individual sells insurance without a license and doesn’t pay any claims.

Fee churning
When intermediaries such as reinsurers are involved, each takes a commission that dilutes the initial premium so that there is no longer any money left to pay for claims.

Asset diversion
The theft of insurance company assets using borrowed funds to buy an insurance company and then using the acquired company’s assets to pay off the debt.

There are serious consequences for committing insurance fraud in Florida so f you’ve been involved in any of these activities in Miami then you may want to call an experienced criminal defense attorney for legal advice.