Insurance companies often face a number of challenges when processing claims, as clients would want to obtain money fraudulently even when the risk insured against does not occur. The representative of any insurance company has to be careful when handling claims since he or she might end up processing claims that do not exist. Several types of red flags exist whenever the representative processes a claim. For instance, the insured could issue contrary information in life application, which is indistinguishable and confusing as regards to the health history. This would include giving varying dates, the places where he or she attends medication, the exact names of personal doctors and hospitals, and specific diseases that he or she suffers from. In other cases, the applicant might fail to sign the letter or he or she might refuse to indicate the date in which the accident or incident occurred. If this happens, it would be considered fraud and the insurance representative is advised to cancel the claim. Additionally, the insured might fail to answer the pertinent questions contained in the application form, including his or her income, other insurance policies, and the dangerous duties that he or she undertakes on daily basis (Popow 78).
When the insured has excess insurance revealed at the time of submission or developed through a countersigning report, then the representative will have to question the credibility of the claim. This means that the claim should be consistent with the policy that the insured applied for in the beginning. In some other cases, the insured tends to overstate his or her income, which might not deserve the amount requested leading to cancellation of the policy. If the applicant’s date of birth differs slightly with the previous applications, the insurance representative has the right to nullify the claim because it would be considered fraud to allow the insured to use different names or age to claim insurance. Finally, if the doctor’s report is vague, the insurance representative will most likely decline the processing of the claim. This would be aimed at safeguarding the interests of the insurance company.
It is advisable that the insurance representative maintains balance when conducting an investigation over any claim. This means that detection of fraud in any claim should not be used as a sufficient reason to nullify the claim. The insured might have given the inaccurate information by mistake or the agent might have misguided him or her. Therefore, objectivity ought to be employed when investigating the accuracy of the claim. One of the questions that the representative should ask him or herself is, “does the insured know the consequences of giving inaccurate information when claiming insurance policy.” If the insured knows the consequences, the representative will definitely come up with a decision that will automatically nullify the claim (Kerr 16). If the insured is not aware of the consequences, he or she should be warned to be accurate in future when giving details, as any inaccurate information would lead to nullification of the claim. Another question that the representative will have to ask is, “will the inaccurate information give the insured undue advantage when calculating the amount to be refunded.” If the erroneous information given does not have any effect on the final amount to be released then the claim should not be nullified.
Kerr, James. The Best Practices Enterprise: A Guide to Achieving Sustainable World-Class Performance. Ft. Lauderdale, FL: J. Ross Pub, 2006. Print.
Popow, Donna. Claim Handling Principles, and Practices. Malvern, PA: American Institute for Chartered Property Casualty Underwriters/Insurance Institute of America, 2006. Print.