Checking Up On Dishonest Clients

March 4, 2011

The insurance industry is very much a game of numbers.  Of course, there’s the numbers that clients pay and the numbers that insurance companies pay out, but there’s also a great deal of statistics that go into the business as well.

Take health insurance, for example.  In order to calculate what an individual pays for health insurance, most companies require a statement regarding the client’s current health situation.  If there are prior health factors coming into the clients’ decision to purchase health insurance, the cost of the insurance goes up.  Good examples of this are diabetes, missing organs, or even cancers.  Other factors that are considered when signing up for health insurance are lifestyle factors like smoking and sometimes even diet or weight.

Certain factors make the cost of health insurance go up.  And since nobody wants to pay more money, this encourages many clients to lie on their forms when they’re signing up for insurance.  A popular one is for smokers to state that they don’t smoke, since smoking can drive up the cost of premiums considerably.

The problems with this are obvious – the reason why health insurance costs more for smokers is because smokers are engaging in an activity that puts their health at risk more so than those who choose not to smoke.  Similarly this also applies to those who engage in risky behaviors such as extreme sports or even motorcycle riding.

 

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In order to combat this, some insurers have been “checking up” on their clients by using such avenues as social network mediums.  Many “nonsmokers” have been shown to be otherwise by their profile or tagged pictures on such sites as Facebook and MySpace, and many people who participate in more extreme activities tend to take photos to show their friends.  In this way, insurance agencies are able to pinpoint clients who may be engaging in behaviors that they explicitly stated they did not do on their insurance applications and applying the appropriate penalties for lying on the original application.  This can help keep insurance at a reasonable rate, since people who lie on their applications and then end up requiring medical attention at a later date drive up the premiums for everybody, since the client wasn’t paying in at an equal amount to his or her risk.

On the other hand, excessive snooping can put insurers in murky legal territory, so it’s wise to exercise caution when using this route to determine if your clients are lying or not.  Alternatively, should a client figure out that you’ve been perusing their Facebook photos to see if they smoke, you might find yourself with one indignant client on your hands, so be careful before jeopardizing your client relationships.

About Troy Wilson