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Workers’ compensation insurance is an essential type of financial protection both for workers who are injured while on the job as well as their employers. Just like any system that is set up for obtaining compensation, there are always people who will attempt to manipulate it for personal gain. When it comes to the insurance world, workers’ compensation is believed to be one of the lines that is most vulnerable to fraud.
According to the National Insurance Crime Bureau, it is estimated that one out of every ten property/casualty insurance claims is fraudulent. Workers’ compensation seems to be the most popular form of fraud, with approximately one out of every four insurance fraud claims in the United States being related to workers’ compensation insurance.
Employees who commit workers’ compensation fraud often say they do so because they feel like it’s a victimless crime, but that belief is far from accurate. Workers’ compensation insurance fraud has multiple victims; policyholders, legitimately injured employees and the insurance carriers. In order to protect the potential victims, it’s important to first understand what the most common types of workers’ compensation fraud are and who they specifically effect.
This type of workers’ compensation fraud occurs when an insured employer intentionally manipulates or withholds information from the insurance carrier as a way to lower their premium payment. Examples of policy-related fraud are:
- inaccurately reporting the size of the workforce,
- misclassifying employees as independent contractors, or
- creating an entirely new company in order to lower the overall experience modification (ex-mod) factor rating.
When a worker stages or falsely claims a work-related injury or illness in order to gain access to workers’ compensation benefits, that is called claim-related fraud. In some cases, a worker may have been legitimately injured outside of the workplace, but later tries to claim that the injury occurred on the job so that their employer will cover it. Another common type of claim-related fraud is when a worker over-exaggerates the severity of an illness or injury in order to receive more benefits or extend their claim longer.
Medical Provider Fraud
Not all medical providers within the workers’ compensation system have the best of intentions. Medical provider fraud occurs when a medical provider performs unnecessary services on a claimant in order to collect higher insurance payments.
Workers’ compensation claim management alone can be confusing for employers, but insurance agents can position themselves to be a great resource for their clients by providing information and resources regarding preventing and identifying workers’ compensation fraud as well as partnering with a commercial insurance broker who has safeguards in place to help reduce fraud before it even occurs.
About Mavon Insurance
At Mavon Insurance, we pride ourselves on our unique approach to insurance. We focus on integrity, communication, professionalism, respect, and gratitude to help our clients succeed and place business in specialized markets. For more information about our products or to become an agent, please contact us today at (855) 248-1480.