Use the index below to go directly to a particular section on this page:
Insurance Fraud And You
Unfortunately, some Mississippians become aware of the financial harm that insurance fraud can cause. They may include people whose insurance
premiums were stolen by a rogue agent or company official. Employees may be left with worthless health insurance or bogus workers’ compensation
coverage. Physicians searching for lower medical malpractice insurance rates may be led to fictitious offshore companies. All consumers become
victims when claim fraud drives up insurance premiums. Every taxpayer is affected when internal fraud results in an insurance company’s financial
collapse. When most licensed companies fail, other companies contribute to the guaranty associations that pay the failed companies’ claims.
Insurance companies recover their contributions through state tax write-offs. This drains away revenue that could have been spent for education,
law enforcement, prisons and mental health.
The Mississippi Insurance Department (MID) seeks to detect fraud and stop it with license revocations, cease-and-desist orders and criminal
prosecutions. MID investigates suspected fraud cases, refers perpetrators to local district attorneys, the Mississippi Attorney General’s Office,
and U.S. Attorneys for prosecution. Insurance criminals often sound very helpful and considerate. They strike when people are the most vulnerable
and their promotions are very enticing. If you feel that someone is offering you something that is too good to be true, report it to MID. Call the
Consumer Help Line toll-free at 800 562 2957 or the Insurance Integrity Enforcement Bureau of the Mississippi Attorney General’s Office at 888 528 5780.
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Agent Fraud
Although the overwhelming majority of insurance agents and companies are honest and reputable, there are a few unscrupulous operators. Protect
yourself by verifying whether or not an agent or company currently is licensed in Mississippi. Be sure to watch out for these agent fraud schemes:
- Pocketing – Instead of turning an insurance policyholder’s premium payment in to the company, an agent simply “pockets” it and leaves the
consumer without coverage.
- Twisting – An agent persuades the life insurance policyholder to change policies after the first year that it is in effect, in order that he
or she can continue to receive the highest commission rates that typically are paid during that first year.
- Churning – An agent tries to sell an additional policy to a person who already has a life insurance policy with cash value. However, the cash
value of the old policy is depleted to pay the premium of the new policy, requiring the policyholder to come up with money to pay for both policies,
or allowing the coverage to lapse.
- Sliding – An agent “slides” extra, more expensive coverage into a low-commission life insurance policy. The extra coverage typically
includes high-cost accidental death, guaranteed renewable term or motor club membership.
- Understatement of risk, or “cleansheeting” - An agent omits pertinent health information from a consumer’s health insurance application to make
a sale which might not otherwise meet the insurance company’s risk-management requirements.
- Fraud rings – An agent that is part of a fraud ring tries to restrict you to going to one particular doctor, auto repair shop, or attorney.
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Fraudulent Claims
Fraudulent insurance claims drive up everybody’s insurance costs. They typically fall in the categories of auto accident fraud and health care
provider fraud. Auto accident fraud typically involves staged accidents in which the drivers intentionally collide or involve an innocent driver
in a wreck that is made to look like his or her fault. Auto repair shops may bill for unperformed work, or charge to replace parts that were merely
repaired. Accident reports may be faked altogether by criminal parties. Don’t place an insurance company sticker on your car – it’s an advertisement
that you have liability insurance. Never follow cars too closely, particularly when the car in front of you is packed with passengers. Watch
traffic in other lanes. A common fraud ploy is for a car in a different lane to swerve in front of you and immediately brake. Compare the body
shop’s bill with the insurance adjuster’s repair estimate. The amounts – particularly the parts total – should be fairly close.
In cases of health care fraud, a provider may bill patients’ insurers for procedures that were never done or perform unnecessary tests. An
unscrupulous provider may bill for superfluous treatments for unspecified illnesses, or con the desperately ill with hopes of an obscure “miracle”
cure. Ask about your provider’s credentials and background. When faced with a treatment, ask about its cost and make sure that your insurance
company will pay for it. If little is known about the treatment, make sure that it has been approved by the Federal Food & Drug Administration (FDA).
Make sure that your bill accurately reflects the services that you received.
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Fraud Against Seniors
Although no one is protected from fraud because of their race, sex or age, the elderly are common targets for insurance fraud because of their
need for financial security and concern about burdening their families. Rogue agents will single out seniors that are vulnerable to high-pressure
sales tactics and misleading sales pitches. Seniors need to be especially aware of “churning” and other forms of agent fraud, as well as
misrepresentation, such as agents claiming to be from Medicare or Social Security. Beware of mail-order or phone solicitations – particularly those
that offer a free gift – and never freely give out your Social Security number. An unethical salesperson will resort to a “guilt trip”, telling
the elderly prospect that they should purchase an insurance policy in order to avoid burdening their family. Only buy the insurance that you need
and can afford. You may be urged to liquidate existing savings or investments in order to purchase a new policy, but always seek the advice of an
independent financial advisor before doing so. MID participates in the Mississippi Insurance Counseling and Advocacy Program (MICAP), which trains
volunteer counselors to assist older Mississippians with insurance-related matters. To learn more about MICAP, call 800 948 3090.
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Pyramid Schemes
Fraudulent insurance products sometimes are sold through multi-level marketing or “pyramid schemes” that emphasize recruitment of salespeople
who share their commissions with a recruiter. (Multi-level marketing usually is legal when commissions and other payments are tied to the actual
sale of goods.) Pyramid schemes involving the sale of insurance products are illegal because licensed agents cannot legally share commissions with
unlicensed persons.
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Business Insurance Fraud
Businesses and professionals often are the target of insurance fraud schemes because they need coverage to stay in business and large commercial
policies generate large premiums and commissions. These schemes focus on expensive products such as workers’ compensation, medical malpractice,
commercial general liability, contractor performance bonds, and trucker’s auto liability. Most of these fraud schemes involve sales of policies by
unauthorized, offshore companies mostly located in small Caribbean or Pacific Island nations. If a company has “Ltd.” or “S.A.” in its name, it
usually indicates an offshore company that cannot sell in Mississippi unless it qualifies as a surplus lines carrier. Most health insurance scams
seen today involve unlicensed, self-insured Multiple Employer Welfare Arrangements (MEWAs) that seduce employers with unusually low premiums for
covering their workers. While many legitimate MEWAs exist – enabling affordable health insurance solutions for many small businesses - unscrupulous
operators usually seduce employers with low premiums. The bogus MEWA begins paying small initial claims, but denies or ignores larger claims for
serious illnesses or surgeries.
When shopping for business or employee health insurance, employers and professionals should stick with agents that have a record of reliability
and honesty. Shop carefully for the insurance that you need. Seek the advice of a trade association on insurance carriers. Study the legitimate
market’s normal price range for the coverage that you want. If a quote is well below this range, be skeptical. If you think a company may be based
offshore, check with MID to see if the company is an eligible surplus lines carrier.
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Arson For Profit
Arson for profit is one of the oldest, most common, and costliest forms of insurance fraud. It is estimated that annual property losses from
arson-related and suspicious fires in Mississippi exceed $62 million each year. Anyone with any information about a suspicious fire should call
their local law enforcement agency or the State Fire Marshal's Office, a division of MID, at 601 354 6900 or 888 648 0877. The State Fire
Marshal's Office, through the "Cash for Hot Tips" arson reward program, is authorized to pay up to $1,000 for information leading to the
arrest and conviction of any person who destroys real or personal property by fire or explosion in Mississippi. The State Fire Marshal’s arson
investigators have an excellent record of successfully solving suspected cases, consistently maintaining arrest rates that are above the national
average. Under the County Arson Investigator Program (CAPI), a trained local investigator can request assistance from the State Fire Marshal's Office
and other state and federal agencies in solving arson-related cases. Consequently, the State Fire Marshal’s Office does not investigate every
suspected arson-related fire occurring in Mississippi.
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Reporting Insurance Fraud
To report insurance fraud, call the Mississippi Insurance Department Consumer Help Line toll-free at 800-562-2957 or the Insurance Integrity
Enforcement Bureau of the Mississippi Attorney General’s Office at 888-528-5780.
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Insurance Fraud Frequently Asked Questions
Fill out the complaint form on the MID website. One form is for agent complaints and the other for company complaints. The complaint forms can be found on the
File Complaint Page.
You will need to contact the Legal Division and find out the process for making a public records request for information regarding any complaints on that particular agent.
It all depends on how long it takes to gather the facts and consider the evidence surrounding the matter. The MID makes an effort to complete all investigations in a timely manner.
Yes
All actions from 2002 forward are posted on the website on the
Enforcement Actions Page.
No, the MID does not have a database or any other means for tracking policies on individuals. However, if you know the name of the Insurance Company that the policy may be with, the MID can contact the Company on your behalf to see if a policy exist.
There are a number of reasons why a Bail Agent may surrender an individual back to the courts/jail and the MID typically does not get involved unless there was some type of fraud committed by the bail agent.
Possibly, it depends on the nature of the crime. These instances are reviewed on a case by case basis.
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