Property and casualty insurance fraud in North America costs billions a year in fabricated and exaggerated claims. Everyone pays that cost in the form of higher premiums – 10% to 15% higher premiums. It is a crime that picks not only the pockets of insurance companies and its clients, but drains the coffers of organizations that must deal with the consequences. The added cost of fire and police services, courts, corrections, medical resources and legal aid and insurance fraud rings up billions of dollars of additional expenses that everyone ends up paying.
Research shows that while consumers make the link between fraud and higher premiums, many still find the justification for committing insurance fraud. Why do normally law abiding people commit insurance fraud? One answer is ignorance – many consumers are not aware that insurance fraud is a crime. Another answer is attitude – a great number of people don’t consider insurance fraud a serious breach of the law, or they pass it off as something “everyone” is doing, so it’s okay. Attitude is especially relevant to what is called opportunistic fraud: the inflating of a claim a little to “cover the deductible” or a lot to recoup the premium.
Half of the survey respondents believed their fellow citizens often exaggerate claims, and 40% figure that it’s common for people to misrepresent information on an application for insurance. While the national average for admitting to insurance fraud is 5%, some (more candid?) sectors readily concede that they’ve committed it. Of people polled who were earning more than $75,000 a year, 18% admitted to committing fraud. Across the country, 10% of young people, 18 to 24, conceded they had committed insurance fraud, twice the combined average for all ages. You can help too. Insurance fraud is now a reportable crime through Crime Stoppers. If you suspect someone of cheating on an insurance claim, call Crime Stoppers with the details. You’ll remain anonymous and investigators will check out the facts.
The campaign slogan “They Cheat. You Pay.” is a reminder that when people cheat on their insurance policies, everyone else pays for it. All types of insurance frauds are reportable through the program, ranging from lying on an application for an insurance policy, to exaggerating a genuine claim, to making an insurance claim that’s completely false.