Insurance fraud victimizes all insurance consumers

Insurance fraud is a deliberate deception against an insurance company for the purpose of financial gain. The Coalition Against Insurance Fraud estimates that insurance fraud cost insurers and their policyholders about $80 billion annually.

Here are some reasons why you should care about insurance fraud…

Premiums stay high. Insurance prices stay higher because insurance companies must pass the large costs of insurance fraud to policyholders.
 People lose their savings. Trusting consumers are bilked out of thousands of dollars, often their entire life savings, by insurance investment schemes. Seniors are especially vulnerable.

Local businesses lose money. Fraud increases the costs for business and makes it more expensive to provide health coverage and other insurance benefits for employees.

Consumer goods and services cost more. Prices of goods at your department or grocery store keep rising when businesses pass higher costs of their health and commercial insurance onto customers.

Schemes kill and injure. People die from insurance schemes such as staged auto accidents and arson — including children and entire families. People also are murdered for life insurance money. Doctors perform dangerous and invasive operations on healthy patients to inflate their insurance billings.
Workers lose jobs. People lose jobs and careers when insurance companies go bankrupt after being looted by company insiders. Dishonest businesses also lie to illegally lower their workers compensation premiums. The swindlers thus can underbid honest competitors for contracts or prices of goods and services. Victimized competitors may have to lay off workers, freeze wages or even move out of state.

Victims feel violated. People feel shame, despair and a sense of violation that can last a lifetime. Fraud schemers also expose their own families to embarrassment in their communities. Jail time and fines also can tear apart families of convicted schemers.

Fraud includes activities committed by applicants for insurance, policyholders, third party claimants or professionals who provide services to claimants, and ranges from inflating or “padding” claims, to submitting claims for injuries or damage that never occurred.

Insurance Research Council studies show that more than one-third of all auto accident injury claims involve fraud. About three percent of claims are premeditated criminal acts such as staged accidents, but ten times that amount (33 percent) is attributed to inflated or fake billings by doctors, lawyers and/or claimants.

Fraud is the second most costly white-collar crime in America behind tax evasion. Stopping this type of criminal activity takes the combined resources of law enforcement, insurers and state agencies. Insurance companies have created Special Investigative Units within their companies, with specially trained professionals who investigate suspicious insurance claims and report them to the State of Nevada Attorney General’s Insurance Fraud Unit.

In Fiscal Year 2011-12, the Nevada Attorney General’s Office initiated 99 fraud investigations; there were 65 prosecutions, 53 convictions and $700,000 in restitution ordered.  Additionally, there were 422 referrals of suspected workers compensation fraud,185 investigations, 119 prosecutions and $44,000 in restitution ordered. 

If you suspect insurance fraud, call the National Insurance Crime Bureau toll-free hotline, 800-835-6422. Your call can be anonymous.

Sources:  Coalition Against Insurance Fraud, National Insurance Crime Bureau, Insurance Research Council, Nevada Attorney General’s Office