Insurance Fraud Hikes Premiums
Last month I discussed the peril of identity fraud. This month the topic is insurance fraud. Chances are, most Americans would agree robbing a bank or stealing a DVD from a retailer is wrong. While insurance fraud is as much a crime as robbery or shoplifting, a large portion of Americans think inflating claims is okay, according to recent studies by two independent firms-the Insurance Research Council (IRC) and Accenture.
Each group surveyed approximately 1,000 people; one in three told the IRC they think inflating insurance claims is acceptable, and one in four told Accenture they would be unlikely to report someone who’s committed fraud.
Survey respondents said they feel it’s acceptable to inflate claims to make up for deductibles or what they perceive as excessively high premiums. Industry experts say that has a huge financial impact on insurers and their customers. The Coalition Against Insurance Fraud estimates fraudulent claims cost the industry as much as $80 billion a year. That means the average property-casualty insurance consumer pays an extra $200 more per year in premiums, according the National Insurance Crime Bureau.
The vast majority of insurance customers are honest. However, some do file fraudulent claims, and there are convictions.
Most companies have a Special Investigations Unit (SIU) that works with agents and claims adjusters to investigate claims that could involve fraud. Years ago, SIU focused almost solely on investigating the cause and origin of suspicious fires. Now, everything from individuals who exaggerate claims to those who run businesses geared solely to create false claims are investigated. It extends far beyond auto theft and includes things like staged vehicle accidents, identify fraud, medical fraud, and much more.
Agents are given resources for reporting suspicious claims and are instrumental in helping the investigations because they’re more familiar with the perpetrators. The deterrence factor is very important. Every company strives to be fair and pay claims, but they also have the right to ask the appropriate questions to fight fraud to keep premiums down. Fraud can’t be a cost of doing business-companies can’t ignore fraud and continue to exist. TPW
Each group surveyed approximately 1,000 people; one in three told the IRC they think inflating insurance claims is acceptable, and one in four told Accenture they would be unlikely to report someone who’s committed fraud.
Survey respondents said they feel it’s acceptable to inflate claims to make up for deductibles or what they perceive as excessively high premiums. Industry experts say that has a huge financial impact on insurers and their customers. The Coalition Against Insurance Fraud estimates fraudulent claims cost the industry as much as $80 billion a year. That means the average property-casualty insurance consumer pays an extra $200 more per year in premiums, according the National Insurance Crime Bureau.
The vast majority of insurance customers are honest. However, some do file fraudulent claims, and there are convictions.
Most companies have a Special Investigations Unit (SIU) that works with agents and claims adjusters to investigate claims that could involve fraud. Years ago, SIU focused almost solely on investigating the cause and origin of suspicious fires. Now, everything from individuals who exaggerate claims to those who run businesses geared solely to create false claims are investigated. It extends far beyond auto theft and includes things like staged vehicle accidents, identify fraud, medical fraud, and much more.
Agents are given resources for reporting suspicious claims and are instrumental in helping the investigations because they’re more familiar with the perpetrators. The deterrence factor is very important. Every company strives to be fair and pay claims, but they also have the right to ask the appropriate questions to fight fraud to keep premiums down. Fraud can’t be a cost of doing business-companies can’t ignore fraud and continue to exist. TPW