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How Prudent Insurers Profit From Effective Anti-Fraud Programs

https://zalma.com/blog

Anti-fraud statutes and regulations enacted in the various states now require that insurers institute anti-fraud programs. Good business sense should have dictated the existence of such anti-fraud programs from the date the first insurance policy was issued, but insurers have always been caught in the Catch-22 obligation to deal with each insured with the utmost good faith. Insurers, not wanting to be accused of acts of bad faith, have always preferred to pay fraudulent claims rather than fight. That it was necessary for states to enact statutes compelling insurers to protect themselves has to be unique to this industry.

The essence of an anti-fraud program is the commitment of the insurer to refuse to pay fraudulent claims. The details of the anti-fraud program are then tailored to the style of the particular insurer, its staff, executives, and counsel.

The anti-fraud programs that have proved to be effective all center around the creation and operation of a SIU (see detailed discussion below). The insurers who understood the need to fight fraud had SIUs in place long before any legislature or Department of Insurance considered it necessary to compel insurers to put one in place.