Health Insurance Scams: How To Avoid Them

As health insurance scams have increased by 15% during the covid-19 pandemic, we explain why you should always look to partner with a trusted adviser…

A saddening reality of the coronavirus pandemic is that nefarious individuals have used the crisis to attempt to scam unsuspecting people into taking out financial services products that do not necessarily meet their needs.

According to research by Aviva, the number of suspicious emails, telephone calls and text messages relating to financial services products has risen significantly since the coronavirus crisis started. 

The Aviva Fraud Report shows that such communications have risen from 11% pre-COVID (January 1, 2019 – February 29, 2020) to 27% during the pandemic (March 1, 2020 – June 15, 2020).

Specifically, the number of scams involving life insurance went up 10% – from 14% to 24%, while car insurance, pensions and annuities-related scams rose by 7%, 3% and 2% respectively.

What to look out for

According to the Aviva report, a typical health and life insurance scam involves a cold call from someone telling consumers “It’s time to review your policy”. The caller will claim they are from a reputable insurance company, or that they have been asked to call by the regulators. These tactics are simply a bid to gain trust. They then often offer lower premiums to entice the recipient of the call to take out the product they are pushing. 

However, what isn’t mentioned is the level of cover the new policy provides, which is usually less than the consumer’s existing product. This effectively leaves the consumer with a worthless policy that does not meet their needs.

The survey of 2,009 Brits also found one in five (22%) has been targeted by suspicious communications that specifically mentioned “coronavirus”. This equates to 11.7 million people in the UK.

Four in five (78%) victims said the fraudsters pretended to be from a company they already deal with.

Reporting is lacking

Almost half of consumers (46%) said they did not report the suspicious communication they received, even though they suspected it was a financial scam. The most common reason given (cited by 41% of respondents) was because they did not know who they should report the communication to.

Sadly, one in 12 (8%) consumers targeted by a coronavirus-related financial scam fell victim to it. This negatively impacted the mental health of 41% of victims. 

Since February, Action Fraud, the National Fraud and Cyber Crime Reporting Centre, says total losses arising from coronavirus-related scams has topped £5m. However, with many people not reporting scams they have fallen victim to, this number is expected to be significantly higher.

Peter Hazlewood, group financial crime risk director at Aviva, said: “While the types of financial scams are generally the same as those before the pandemic, fraudsters are exploiting the pandemic to take advantage of people when they are at their most vulnerable. They are using coronavirus as a pretext to lure potential victims. The scams range from attempts to sell people unsuitable insurance to, at worst, stealing their entire retirement savings. The impact on victims is not just financial either, it has a detrimental effect on people’s mental wellbeing too.”

In Summary

With the ongoing coronavirus pandemic still impacting many areas of people’s lives, it is important to remain aware of the fact that there are unscrupulous individuals out there trying to gain from the current situation. One of the best ways to protect yourself is by not entertaining cold calls from individuals pushing financial services products — even if they purport to be from a reputable organisation. If you want to be sure that you are dealing with a party that is legitimate and has your best interests in mind at all times, contact us today.