Insurance Fraud: It's Everyone's Problem

Insurance fraud. It is a crime that is very much prevalent in American society today. In the category of ‘economic crimes’, fraud is second only to tax evasion. The repercussions and scope of insurance fraud grow in magnitude each year, perhaps due to the perception that insurance fraud is a victimless crime that has little effect on consumers or even insurance companies. As many as 39% of Americans feel, it is perfectly acceptable to inflate a claim. So broad is this belief, that insurance companies see examples of claim padding on a daily basis. However, the reality is insurance fraud affects not only insurance consumers and the companies that seek to protect them, but its’ consequences are felt by every consumer living in America.

Did you Know…
Insurance fraud inflates the cost of each consumer's insurance premiums by $200 or more per year and costs the average American household nearly $1,000 in extra insurance premiums per year. Insurance fraud amounted to an estimated $120 billion in 1999 and continues to rise. At least 10% of all auto, home, and business insurance claims are either fraudulent or highly inflated. Auto, home, and business insurance fraud alone cost Americans an estimated $21 billion in 1998.

Though experts differ on the exact amount that is lost each year, all can agree that insurance fraud is an expensive problem that results in billions of unwarranted dollars being doled out at every consumer's expense.

What perpetrators of this crime fail to realize is not only are they cheating the insurance company, they are cheating honest consumers, and in some way cheating themselves. The stolen dollars from insurance fraud usually find their way back into the economic system in the form of increases in the cost of goods and services or hefty increases in taxes. Until these crimes cease or are reduced, insurance premiums will continue to rise and cause consumers to defer personal spending, and cause businesses to increase their prices to make up for the increasing cost of insurance.

continue