Overview of Insurance Fraud in Minnesota

Though states vary in their exact definitions and terms for insurance fraud, it generally pertains to intention of a party to deceive another party with the purpose of getting and using insurance benefits to their end.

In Minnesota, as in any other state, there are generally two kinds of insurance frauds that can occur. One is hard fraud, which involves actions by individuals or groups of individuals to stage an accident or other loss with the purpose of collecting benefits from insurers. Also considered to be hard frauds are theft and arson, committed with the purpose of claiming benefits illegally. On the other hand, soft fraud is committed when policyholder intentionally provide inaccurate information or give ‘white lies’ in order to further enhance the benefits gained from a policy.

Insurance frauds can also be internal or external. As the name suggests, internal frauds are committed by members of the insurance industry themselves such as insurance company executives, employees, or agents. Included in the unscrupulous acts that these individuals may commit are issuance of fake policies, insurance identification cards, binders, or certificates, keeping premium payments to themselves without issuing accompanying policy or giving a fake document, or making and submitting inaccurate information to the Minnesota Department of Commerce, which oversees the state’s insurance industry. External frauds, on the other hand, are committed by policyholders who wish to obtain benefits fraudulently. However, this act of fraud is not limited to policyholders. Primary care providers, vendors, organized crimes, even beneficiaries themselves, may also commit acts with the intention of claiming benefits from insurance providers. Examples of such acts are creating fictitious claims of injuries from actual accidents to increase the amount of claims, purchasing numerous policies on particular policy with the intention of damaging the property to collect proceeds, collecting worker compensation benefits when there is none, falsifying reports of thefts, and committing arson for insurance money.

There are also several acts that insurance companies are prohibited from doing. The state of Minnesota has provisions that are intended to protect insurance consumers from being disadvantaged or defrauded by their insurance providers. Included in these prohibited acts are the solicitation of a sale of any insurance policy, asking insurance policyholders to sign certificate of authority on insurer’s favor, and misappropriation and embezzlement of insurer’s funds. Insurance companies are not also allowed to divulge information on the financial status of the insured nor are they allowed to accept added risks or renew a policy of an insurer who has been previously declared to be insolvent.

To further address the issue of insurance fraud, the Minnesota Department of Commerce has created the Division of Insurance Fraud Prevention in 2004. This particular agency is funded by the insurance industry and enjoys jurisdiction over the whole state on matters relating to the prevention as well as conviction of offenses related to insurance fraud. The division enjoys partners and cooperation with several federal agencies such as the FBI, the U.S. Attorney’s Office, U.S. Department of Labor, among others. Local partners include the Minnesota Department of Public Safety, County Attorneys, the Minnesota Department of Employment and Economic Development, as well as local sheriffs and police department chiefs. The involvement and participation of the private insurance industry is manifested in the cooperation provided by the National Health Care Anti-Fraud Association, the Insurance Federation of Minnesota, the National Association of Insurance Commissioners, and other similar organizations.

Anyone policyholder who happen to know of any suspicious practices made or perceived some form of discrimination from your insurance provider would do well to approach any of the organizations and agencies mentioned for further clarifications and guidance. However, know that there are also certain instances that policyholders may experience and perceive to be unfair practices yet may not be the entire case. Such is the possibility when there is a disagreement between the policyholder and the insurance provider about a certain claim or when the insurance company decides to decline an application or renew an existing coverage. When these occur, policyholders must make sure their providers are able to furnish all the necessary documentations and written explanations regarding the contending issue.

We help our Minnesota customers in Minneapolis, St. Paul, Rochester, Duluth, Bloomington, Brooklyn Park, Plymouth, St. Cloud, Eagan, Maple Grove, Coon Rapids, MN and other cities in The North Star State lower their premiums and save money on all types of insurance. Use the form above to find low cost auto, homeowners, health, medical, life and long term care insurance. Using our Minnesota insurance agent and broker network, you can compare rates quickly from the comfort of your home.

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