What is "insurance fraud"?

"Insurance fraud" is defined as providing false information or engaging in deceptive practices to gain financial benefits from an insurance policy. This can manifest in various forms, such as submitting inflated or falsified claims, misrepresenting the value of a loss, or staging accidents to collect insurance payouts. This definition captures the essence of the motive behind insurance fraud, which is to derive unjust profit or benefits that would not be lawfully obtained.

The legitimate submission of claims would imply the truthful and accurate reporting of incidents that occur, which is essential for the insurance system to function correctly and is the opposite of fraudulent behavior. Detecting and reporting on fraudulent claims is an essential function of insurers and regulatory bodies, but it does not define fraud itself. Regular changes in policy information might suggest adjustments or updates to a policyholder's coverage or details but do not pertain to the fraudulent activity inherent in misrepresenting or falsifying information for undue advantage. Thus, the characterization of insurance fraud as providing false information to gain financial benefits is both comprehensive and precise.