Insurance fraud is among the most costly white collar crimes in America. According to a 2000 study by Hartford, Conn.-based Conning & Co., insurance fraud costs the American public $96 billion dollars annually in increased premiums.
And that tab includes only the direct cost of insurance, not the consequential higher prices for consumer goods and services. A report by the Association of Certified Fraud Examiners in 1996 estimated that such consequential costs could range as high as $530 billion.
Definite assessment of the cost of insurance fraud is impossible because of the sheer size of the problem, the number of victims involved and the hidden nature of the crime. After all, the successful fraud scheme is never discovered to be fraud. The only points of universal agreement are that the numbers are staggering – and consumers are footing the bill.
Insurance fraud is a serious crime. In California, presentation of a false insurance claim is a felony punishable by up to five years in state prison and a $50,000 fine. Actually receiving payment on the claim can result in additional serious charges such as grand theft.
In Nevada, insurance fraud is a felony punishable by up to four years in prison and a maximum fine of $5,000. Those convicted are also required to pay restitution to the insurance company that was defrauded.
Who commits insurance fraud?
Despite the costs and the consequences, people from all walks of life tend accept insurance fraud to one degree or another. Many otherwise law-abiding individuals are willing to steal just a little bit from their insurance company in order to cover the deductible on their loss, or to have old damage to their car or home repaired as a part of a more recent loss. A survey commissioned by the Insurance Research Council in 2000 revealed that 35% of Americans believed it was acceptable to increase the amount of an insurance claim to cover a deductible. And 24% believed it was acceptable to exaggerate insurance claims to recoup past premiums.
Then there are the professional criminals committing "hard fraud," such as staging fake automobile collisions or thefts or setting arson fires to collect insurance proceeds. They have developed a whole range of fraudulent schemes to bilk insurance companies, like the "swoop and squat" or medical mills, that often result in harm to individuals as well.
You can play a vital role in combating fraud and helping keep insurance premiums low. If you suspect someone is committing insurance fraud, you can report it in two ways:
If you suspect fraud at CSAA, you may email us at Fight_Fraud@csaa.com.
To report insurance fraud anywhere, call: 800-TEL-NICB (800-835-6422).
When reporting fraud, provide as much of the following information as possible:
You need not give your name. Those who call may qualify for rewards.
For more info…
To learn more about insurance fraud, contact the Coalition Against Insurance Fraud.