Insurance Fraud 10% Of Your Insurance Premiums?
Insurance fraud doesn’t look like it will be going away anytime soon. If the estimates that 10% incurred losses are from fraud are correct then I would suggest your insurance premiums are at minnimum 10% higher due to insurance fraud and climbing. Reporting insurance fraud when aware of it is a good idea.
The Insurance Information Institute estimates that fraud accounts for about 10 percent of the property/casualty insurance industry’s incurred losses and loss adjustment expenses*. This fraud results in higher premiums.
Fraud may be committed at different points in the insurance transaction by different parties: applicants for insurance, policyholders, third-party claimants and professionals who provide services to claimants. Common frauds include “padding,” or inflating actual claims; misrepresenting facts on an insurance application; submitting claims for injuries or damage that never occurred; and “staging” accidents.
Prompted by the incidence of insurance fraud, 42 states and the District of Columbia have set up fraud bureaus (some bureaus have limited powers, and some states have more than one bureau to address fraud in different lines of insurance). These agencies have reported increases in referrals (tips about suspected fraud), cases opened, convictions and court-ordered restitution.
The exact amount of fraud committed is difficult to determine. The proportion of fraud varies among the different lines of insurance, with healthcare, workers compensation and auto insurance believed to be the lines most vulnerable. The nature of fraud is constantly evolving. Shortly after the enactment of the 2010 healthcare reform law, the Health and Human Services secretary issued warnings about a proliferation of phony health insurance policies.
*Estimate based on research conducted by the Battelle Seattle Research Center for the Insurance Information Institute in 1992 (Fighting the Hidden Crime: A National Agenda to Combat Insurance Fraud. Insurance Information Institute, March 1992) and other industry reports (including Insurance Fraud, Renewing the Crusade, Conning, 2001).
The National Insurance Crime Bureau (NICB) said that 70,295 questionable claims were referred to it in the first three quarters of 2010, about 7,400 more than in the first three quarters of 2009, or an increase of 12 percent. The largest number of suspicious claims in the first three quarters of 2010 was in the faked or exaggerated injury category, up 17 percent from a year ago to 11,048. Questionable claims for auto glass fraud were up 511 percent in the first three quarters of 2010, compared with the previous year. (See following chart.)
(1) Includes property, casualty, commercial, workers compensation, vehicle and miscellaneous claims.
Source: National Insurance Crime Bureau.
Source: Article From IIX Website