How Insurance Fraud Hurts Families and How Insurance Agents Can Prevent It   

 When a top insurance executive is murdered in broad daylight, the headlines don’t just focus on the crime—they focus on the why. The recent death of UnitedHealthcare’s CEO on a Manhattan street shocked the public. But what stood out most was the reported motive: frustration over denied claims, rising premiums, and a system that often fails the people it’s supposed to protect.

That single event highlighted a deeper issue. People are angry. They’ve been denied coverage when they needed it most. They’ve watched premiums climb year after year.

And now, insurance agents are under more pressure than ever—not just to process claims but to protect honest families from getting lost in the chaos caused by fraud and administrative roadblocks.

Insurance fraud makes all of this worse. It drains resources, clogs systems, and forces legitimate claims into longer review cycles. The result? Delays, denials, and higher premiums for everyone.

Denial Rate in Health Insurance   

Understanding the frequency and reasons behind claim denials is crucial for insurance agents aiming to assist clients effectively. Here are some key statistics:

• Private Payers: Approximately 15% of medical claims submitted to private payers are initially denied. This includes claims that had prior authorization.
• Medicare Advantage: Denial rates are similar, with about 15.7% of claims initially denied.
• Managed Medicaid: These programs experience an initial denial rate of approximately 15.1%.
• Medicare: Exhibits the lowest initial denial rate among major payers at 8.4%.
• Medicaid: Has the highest initial denial rate at 16.7%.
• Marketplace Plans: Denial rates vary significantly, ranging from as low as 1% to as high as 80% among different insurers.
• Common Denial Reasons: Include administrative errors, lack of prior authorization, services not covered under the plan, and issues with medical necessity documentation.

These statistics highlight the importance of meticulous claim preparation and the need for robust verification processes to minimize denials.

What Insurance Agents Are Up Against   

According to the FBI, Insurance fraud costs the industry more than $40 billion each year. That cost trickles down to policyholders, increasing their premiums by hundreds of dollars annually. More importantly, it makes your job harder. Each fraudulent or error-filled claim means more paperwork, more calls, and more time away from helping families who did everything right.

You’ve likely seen it happen—claims delayed because of identity mismatches, inconsistent details, or red flags that lead to unnecessary denials.

Denial Code 224: Real Claim Denials Caused by Fraud or Errors   

Some of the biggest delays in claims aren’t caused by bad intentions but by confusion. A missing document, patient mismatching, or an unverified identity can stop a claim cold. And when you’re dealing with high volumes, even small errors add up fast.

Insurance companies refer to this as Denial Code 224.

This code appears when the insurer suspects the patient’s identity has been compromised. It often points to possible identity theft or serious inconsistencies in the claim. Until the patient’s identity is verified, the claim can’t move forward.

Code 224 is triggered by issues like:

• A stolen or misused identity
• Missing or incorrect personal details
• Mismatched insurance records
• Lack of documentation to prove the patient is real
• Prior flagged activity tied to the identity

Even if the person is legitimate, the claim stays stuck until everything checks out. It’s another way fraud or careless handling makes it harder for honest claims to get approved.

Now, think about the real people behind these claims. Someone is recovering from surgery. A parent dealing with the aftermath of a car accident. A widow trying to file after losing a spouse. They aren’t looking for shortcuts—they just want to support their policy promises.

But those claims can get stuck because of:

• Incomplete or incorrect patient information
• Missed pre-authorization requirements
• Errors in insurance ID or procedure codes
• Services provided by out-of-network providers

These common problems were highlighted in a recent eClaimStatus article. According to Needle, poor identity verification is a leading cause of preventable denials. Insurance agents are left cleaning up the mess when the details don’t add up.

What Drives Insurance Premiums Higher   

Fraud is just one part of the issue. Here are other key drivers of rising premiums:

• Fraudulent Claims – Fake or exaggerated claims increase payouts and force companies to invest more in investigation and compliance
• Natural Disasters – More fires, floods, and storms mean more claims.
• Inflation – Higher prices for parts, labor, and care increase payouts
• Reinsurance – Carriers are paying more for their own insurance
• Litigation – Lawsuits and big jury payouts are forcing insurers to raise rates.

Fraud—including inflated or completely false claims—creates a ripple effect across all these areas. It adds uncertainty, forces stricter verification, and increases costs that get passed down to every policyholder.

How Insurance Agents Can Help Prevent Denials   

Insurance agents are the first step in the claims process. That gives you a critical role in preventing issues before they reach the carrier. Here’s what helps:

1. Double-check for Inaccurate or Missing Data 

Mistakes in names, birthdates, policy numbers, or codes are among the top causes of delays. Taking time to verify these details avoids unnecessary denials.

2. Use Identity Verification Tools 

Don’t rely on manual checks. Tools like People Search, SSN and Name Match, and Background Check can help you assess and find more information about a policyholder. These tools quickly flag discrepancies and help avoid issues later in the process.

3. Stay Ahead with Pre-Authorization 

Always check if a procedure or service needs approval before it’s performed. Missing pre-approval is a fast track to denial.

4. Watch for Out-of-Network Cases 

Make sure patients understand if a provider is outside their plan. This is one of the most avoidable reasons claims get denied.

5. Keep Staff Trained 

Insurers update requirements often. Make it a point to review new rules or code changes with your team to avoid falling behind.

Identity Verification Tools Insurance Agents Should Use

Verification doesn’t need to be slow, manual, or overwhelming. The right tools can save you time, cut down on rework, and prevent the kinds of errors that lead to delayed or denied claims. These tools are especially helpful when handling higher-value claims, new policyholders, or any case that seems slightly off.

Below are three specific tools that insurance agents can start using immediately—and how they can fit directly into your existing workflow.

1. People Search – Confirm Identity Against Public and Private Records 

A People Search tool pulls data from multiple verified sources to confirm a person’s identity upon onboarding. It checks public records, address histories, associated phone numbers, and known aliases. You can use this when:

• A policyholder’s name doesn’t match what’s on the claim
• There are conflicting addresses or phone numbers
• A claim is being submitted from someone not listed as the primary insured

By running a quick People Search, you can confirm that the person exists, their data matches what you’ve been given, and the claim is being submitted by someone tied to that identity. This helps prevent identity mix-ups and flags early signs of fraud.

Where to use it:

Before processing a high-dollar claim or when onboarding a new policyholder.

2. SSN and Name Match – Spot Fake or Mismatched Identity Claims 

This tool checks if the Social Security Number provided actually matches the name submitted with the claim. Mismatches can happen for innocent reasons, but they’re also a common sign of fraud or stolen identity use.

SSN and Name Match is especially useful when:

• The claim is flagged with Denial Code 224
• You’re handling claims for patients without prior history in the system
• Someone is submitting a claim on behalf of another person

This tool will confirm if the SSN belongs to the person filing the claim. If it doesn’t, the system will prompt you to re-check the application, which can save hours of delay down the line.

Where to use it:

When verifying sensitive claims, new customers, or anything with suspicious submission patterns.

3. Background Check – Surface Red Flags Before Processing the Claim 

A background check doesn’t just apply to criminal records—it can reveal credit issues, fraudulent activity, multiple conflicting addresses, and other inconsistencies that signal risk.

Background Checks are a helpful second layer of defense when:

• A claim seems rushed or unusually urgent
• The payout amount is significantly higher than normal
• You’ve already spotted a data mismatch or incomplete documentation
• Check whether the claimant is a listed family member or a relative

You’re not accusing anyone of fraud. But you are making sure nothing gets past your review process that could later be denied or trigger an investigation. A background check is your way of saying: “Let’s make sure this person’s story checks out.”

Where to use it:

On claims flagged as high-risk or when you’re unsure about the policyholder’s recent activity.

Key Takeaway   

That tragedy in Manhattan wasn’t just about one person—it was a sign of how broken the system feels to many. Denied claims, rising premiums, and fraud have all played a role in eroding trust.

You can’t fix everything—but you can protect the people you serve. Preventing errors, catching fraud, and verifying data upfront help families get the coverage they deserve without delays or frustration.

You’re not just submitting paperwork. You’re helping people move forward with their lives.