Article for October, 2005

Everyone is a victim of insurance fraud. Fraudulent insurance claims result in higher costs to insurance companies and rising premiums for all insureds. The National Insurance Crime Bureau suggests fraudulent claims result in premiums increasing several hundred dollars per household and cost the industry billions each year.

Studies conducted by the Insurance Research Council identify insurance fraud as the second largest economic crime in the US, trailing only tax evasion.

Some estimates indicate that fraud accounts for 10 percent of total claim payments. Even more disturbing, surveys indicate that roughly 33 percent of Americans believe filing fraudulent claims is acceptable under certain circumstances.

Despite these troubling statistics, surveys also show that the majority of Americans think insurance fraud is a crime worthy of harsher penalties. Nearly 92 percent of respondents  felt they would support tougher insurance industry measures to prevent fraud.

An interesting website to check out is www.cheatingculture.com, which looks in depth at what motivates people to commit many different kinds of fraud, from accountants, doctors, and resume padding to doctors, lawyers, educators and sports professionals.

Every day we read in newspapers, and see on TV how people get caught committing various types of fraud. Insurance companies and state governments are constantly trying to grapple with the problem of fraud, especially when there is a major disaster, like a hurricane or fire.

Several things everyone can do to protect themselves against being defrauded are time consuming, which is why many people just don't do them.

In regard to insurance fraud, many people feel it's ok to pad a claim, as it's just a big company that has lots of money, and many insureds know they pay hundreds of dollars every year for policies they may never have made claims on, so they feel they deserve to make a little money back. This kind of thinking can snowball. Some of these people become careless, and that's how they get caught. The Massachusetts Insurance Fraud Bureau has been investigating and prosecuting fraud cases for many years now, and people are doing jail time for committing fraud. In fact, partially due to efforts in Lawrence, Lynn, Lowell, and Holyoke, enough claims have been successfully prosecuted, that auto rates may actually go down for the entire state, as the major players realize insurance fraud is a serious offense, and are finding other things to do with their time.

To report any type of insurance fraud, you may reach the Fraud Hotline by calling 1-800-32FRAUD.