Q&A from state Insurance and Fire Commissioner John Oxendine

By John Oxendine

Q: Insurance Fraud: What is it and how do I report it?

A: Each year, insurance fraud costs companies and consumers tens of billions of dollars. 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.

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. They’re usually difficult to reach by phone — if there is a listed phone number at all. Consumers can check with my office to be sure they’re dealing with a legitimate, licensed insurer before signing an application for a policy.

Legitimate companies that are not licensed by the state to sell insurance might lead consumers to think they are selling “insurance” while evading state regulations. A company selling a health discount plan might call the plan insurance when it is really an unregulated, non-insurance product. If you question whether a product you are offered is insurance, contact our Consumer Services Division for confirmation.

Individuals within the insurance industry have also deceived consumers for personal gain. 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 the consumer's policy. If you do not receive an insurance ID card or a copy of your policy in a timely manner, it could be an indication that your premiums have not been paid to the insurance company. Again, if you have questions or concerns, you can contact my office or the insurance company directly for confirmation.

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.

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 report it to my office as soon as possible. By investigating and apprehending criminals, we can minimize future instances of insurance fraud and reduce unnecessary insurance costs.

In Georgia we have a special Fraud Unit to address the growing problem of insurance fraud. Investigators work cases originating from various sources, such as law enforcement agencies, insurance companies and consumer complaints.

Good advice when you have any doubt about a company, policy or agent is to stop, call, confirm: stop before signing any paperwork or writing a check; call my office at the number below; and confirm the company or agent offering insurance is legitimate and licensed in the state.

Send your insurance questions to: Insurance Commissioner John Oxendine,716 West Tower, 2 Martin Luther King Jr. Drive Atlanta, GA, 30334

You may also call the office at (404) 656-2070 (toll free 800-656-2298), from 8 a.m. to 7 p.m. weekdays. The department’s Web site is www.gainsurance.org