Catastrophes and accidents take a toll psychologically and financially on people and entities. Small businesses and large companies protect themselves from the negative repercussions of unforeseen events when they get insurance. Sometimes they also build a claims management software system so that they can evaluate and record all claims made for them or against them. But even when people prepare for the biggest disasters, they can still be trapped in bureaucratic red tape because of the large number of claimants.
The Age of Terror
Since September 11, terrorist attacks have been a part of our reality. One of the aftermaths of that event was numerous claims for individuals and structures in the city of New York. The government set up the September 11th Victim Compensation Fund, which handled all applications from 2001 to 2003. It was reopened in 2011 to handle other smaller claims relating to health issues. As of now, the Fund has released 7 billion dollars, from $2 million to $7 million.
This single event was thought at the time to be the biggest insurance claim in history, as it affected thousands of people, several properties that included aircraft and skyscrapers, as well as other properties such as cars and shops.
Storms, hurricanes, and earthquakes also cause many people to file insurance claims. When Hurricane Sandy hit several U.S. states in 2012, the damages reached $65 billion in damages and left millions of people homeless. But even if the survivors immediately filed claims, many of them still had not received their compensation three years after the disaster.
Many people who live in flood-prone areas of the United States are required to pay for flood insurance. Still, sometimes homeowners do not receive the compensation they thought was due to them or occasionally did not receive any compensation at all.
The government acknowledges that the system needs improvements, and the Federal Emergency Management Agency (FEMA) has imposed a strict audit and oversight of the flood insurance program since 2009. However, it might still not be enough to limit the profit margins of some insurance companies.
Fraud on Both Sides
But profit margins aren’t the only problem. There have been instances when people use tragedy or the fear of it make false insurance claims or even sell fraudulent insurance. Agents sometimes urge people to pay the premium but never report this to the insurance agency. This scam has left thousands of people to pay for their medical bills at a time when they need their insurance the most.
Then some people use a tragedy to make false claims of property loss or accidents. Some of these fraudsters target businesses since they know that companies have ready insurance to pay for damages and medical bills. But many insurance groups are creating a database that checks insurance claims. The system can connect the dots and check if specific individuals or groups are making similar claims across the board.
Any disaster creates havoc, and it pays for individuals and corporate entities to be prepared. However, there should be a quick response system to aid those affected and to prevent scammers and fraudsters from abusing the system. Hopefully, the creation of claims systems and databases will be enough to improve the insurance industry.