Consumer Insurance Fraud/Abuse as Co-creation and Co-responsibility: A New Paradigm

Abstract

Insurance fraud and abuse-international concerns-are inherent in the proposition of insurance and prevalent in insurer-insured interactions. While the subject of considerable industry and regulatory attention, this little-researched area of consumer behavior and consumer ethics represents persistent social policy questions and problems at multiple levels. This paper addresses the issue by first defining insurance fraud and its origins in contract, as well as consumer-and insurer-management. The authors conclude by re-envisioning the problem as one of co-creation by the consumer-insured and insurer personnel, proposing a framework for its study and resolution.

When serving customers includes correcting them: Understanding the ambivalent effects of enforcing service rules

“…Notably, one in five customers who requests an increase in insurance benefits from this provider is not eligible to receive these benefits, thus consciously or unconsciously attempting to circumvent the established service rule. Such attempted insurance fraud is a widely recognized form of dysfunctional customer behavior (e.g., Fisk et al 2010;Lesch and Brinkmann 2011). To counter this dysfunctional behavior, medically trained service employees visit and physically examine all customers who initially request insurance benefits or who request an increase in their benefits.…”

Neutralization techniques as a moderating mechanism: Ethically questionable behavior in the Romanian consumer context

“…Consumer insurance fraud is also considered unlawful behavior. It may occur at any stage in an exchange with an insurance company, from application stage (e.g., misstating annual auto mileage, failing to reveal pre‐existing damage to a covered item), to claiming for exaggerated injuries, “invented accidents,” or conspiracy with network service providers (Lesch & Brinkmann, ). What is clear from the various actions, the determinants of ethically questionable behavior change their relevance depending on the type of the behavior, the context, and opportunities that arise.…”

Equity and Ethical Environmental Influences on Regulated Business-to-Consumer Exchange

“…But, contemporary practice does not necessarily place the consumer-from their point of view-at the center of exchange. Getting to that point will require a re-orientation involving transparency of service terms and their administration, ongoing social reconciliation of classification and rating schema, and greater consistency of terms across the now state-level regulatory process in order to balance both expectations and the respective roles of the parties in co-production (Government Accounting Office 2003; Lesch and Brinkmann 2011). As it stands, standardization and the imposition of adhesive contracts loom large as obstacles to balanced exchange in this now mature industry covering numerous categories.…”

“…Moreover, no matter the level of standardization, these credence goods and their terms and administration entail machinery cloaked in proprietary procedures employed from the point of origin (application or screening), through to either fulfillment or denial of a claim. Consumers retain little to no control over a service whose successful fulfillment demands co-production (Lesch and Brinkmann 2011).…”

“…Thus, the nature of exchange between and among industry, consumers, and various intermediaries is complex. The focus of our study-consumer-society-insurer relations-arises from the reciprocal posture of consumers vis-a-vis the social order (Lesch and Brinkmann 2011). The consumer-service provider relationship is proscriptive, one in which one's rights and privileges as a party to a service agreement are neither comprehensible nor within one's direct control.…”