Insurance companies often claim in their advert that they are just selling an insurance policy but offering their clients protection against unforeseen circumstances. These companies claim that they want to take away the risks associated with unforeseen circumstances from their clients. By purchasing the company’s insurance policy, the client is transferring these risks to the company. Thus, when a disastrous event occurs in the future, the company will bear the cost of such disaster. 

Although insurance companies claim that they are in business to make their clients happy, the real reason these companies are in business is to make profit. The bottom line is the only thing that matters to these companies. Therefore, many insurance companies come up with dirty tricks and unethical behaviors in order to maximize their profits. 

While the insurance companies smile to the bank, their clients are usually shortchanged. These tricks are deliberately employed by the insurance companies to defraud their clients. It is a known fact that some insurance companies reward employees who make more money for the company by defrauding clients. Employees who are honest with clients are usually sacked by these companies. By taking such actions, these insurance are deliberately encouraging their employees to shortchange their clients for the benefit of the company.

Below are some of the tricks employed by insurance companies to defraud their clients:

Denying Valid Claims: This is a common trick use by insurance companies to defraud their clients. Even the biggest insurance companies in the country employ this trick. With the current economic turmoil being experienced by the insurance industry, it is expected that more legitimate claims will be denied by these companies in order to maximize their profit.

Many insurance companies usually try every trick in the book to avoid paying legitimate claims. They come up with all sort of excuses-- most of which are ridiculous-- to deny their clients of valid claims. Funny enough, most of the reasons usually given for denying legitimate claims are stated in the insurance policy.

The bad faith auto insurance fraud is a good example of insurance fraud committed by insurance companies. In a bad faith insurance fraud, the company uses a nonsensical clause -- usually not stated in the policy—as an excuse for not paying the claim. In some cases of this fraud, the company just simply refuses to process the claim. However, a policy holder can appeal this denial as long as he has a strong case. 

Health insurance companies are also guilty of this insurance fraud. These companies deliberately refuse to pay legitimate claims in the hope that clients will not protest their decision. While in some cases, they come up with different excuses to avoid claim payments. Many health insurance companies or brokers are not legitimate companies. These companies are in business to defraud people desperately looking for cheap health insurance policy; they, therefore, have no intention to pay claims.

Abandoning the Sick: This is exclusive to health insurance companies. These companies are fond of cancelling the policies of clients whose medical conditions are becoming more expensive to treat. Unfortunate for these clients, this is the period when the insurance policies will be most valuable to them. 

Delaying Claims until Death: This tactics is commonly employed by long-term care insurers to avoid payment in the hope that their clients will soon give up the ghost. Senior citizens are usually the holders of long-term care insurance policies. Thus, these companies try to take advantage of their clients’ age and failing health. Most long-term care insurers believe that the more they delay claim payments, the higher the possibilities that they will avoid the payment because the client will soon die.

Confusing Consumers: Insurance contracts are deliberately written to confuse consumers. Insurance companies slot in clauses, which consumers don’t understand their implication, into their contracts. These clauses are the escape routes these companies use to avoid payments.

The main purpose of establishing every business is to make profits. This also applies to insurance companies. Although there are some good insurance companies that render top-class service to their clients, the bad and ugly insurance companies only care about profits, even at the detriment of their clients.