Another form of fraud common in car insurance companies if soft fraud or exaggerated car insurance claims. This is an insurance fraudulence activity which is very close to the fabricated claims. In this case, the claims are exaggerated following a loss. The main difference between these forms of fraud is that in the case of soft fraud, the claim is real but manipulated. In the case of card fraud, the claim is completely factious (FBIC, 2010). In this case, the insured individuals have a just claim. However, these claims exaggerated.
The value claimed is far beyond genuine value. In many cases when the insured loses their vehicle, they exaggerate by claiming that very expensive things were inside the boot of their cars. In this case, their main aim is to increase the amount of money to compensate. In case the insured person succeeds in convincing the company, they end up receiving more than what they are entitled to from the insurance company. In such a situation, it becomes very difficult for the insurance company to determine the truth the whole incident.
However, the insured party may lose compensation of the claim in case the vehicle is recovered and it is found that the information given was false. Again, this increases the level of inefficiency in car insurance companies’ operations. It also leads to increases in the premium package. Causes of fraud practices and corruption In the car insurance companies, the cases of corruption and deprivation of the level of integrity have significantly led to poor performance in the insurance companies Corruption deals in its operations reduces its ability to its clients effectively.
It also affects the quality of services provided. There are several factors which have encouraged the frauds and corruption cases in the car insurance industry. One of the main factors which have encouraged fraud cases in the car insurance industry is poor management. In some cases, the managers fall in differences with the directions on various policies. These misunderstandings slow down the process of policy formulation.
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