Claims fraud is a frequent topic of discussion in the industry, and there is no doubt that there are fraudulent claims. Some are false from the start and others become exaggerated during the life of the claim. There are videos of claimants who said they were disabled but were able to perform physical acts many would aspire to undertake.

Frequently, proof or indications of fraud have been found on social networking sites, posted in some cases by the claimants themselves. It is surprising how many people put damaging evidence on their social networks, which can make an investigation firm look very good.

Interestingly, there seem to be a lack of steps or processes that adjusters take when they receive a claim which has been identified by the insured or client as a potentially fraudulent claim, or when questionable circumstances exist that could indicate a fraudulent claim is being presented. Sometimes adjusters immediately deny the claim, or delay performing the investigation. This benefits a truly fraudulent claimant and usually results in either:

1. Reluctantly accepting the claim after alienating the claimant, which leads to higher costs, or

2. Denying the claim, which is later overturned because of a lack of sufficient proof, resulting in increased costs because of the additional legal defense costs incurred.