Bonnie and Clyde, Mama Buck, Baby Face Nelson and Willie Sutton rob a bank.When reporters asked him why he did this, Sutton said Replied “Because that’s where the money is.” If banks put $3.1 trillion in cash assets Attracting criminals to steal US$10 trillion in assets from the banking and insurance industries, scammers are even more controversial. And indeed it is.
In addition to the bank annual review loss Insurance fraud costs approximately $2.7 billion shocking $308.6 billion per year. The FBI handles major insurance fraud cases. affim The sheer size of the insurance industry “provides greater opportunities and greater incentives to commit illegal activities, thereby greatly increasing the cost of insurance fraud.” From the fraudster’s perspective, insurance fraud is an unsafe Crimes requiring guns, masks or getaway cars.in the days of prisoners Hearings Regarding how to reduce insurance costs for consumers, one of the solutions is to combat insurance fraud. Insurance companies’ losses caused by fraud are passed on to all policyholders. If insurance fraud is eliminated, premiums will be reduced by 10%.
insurance fraud is second-The largest category of white-collar crime after tax evasion. The huge losses incurred by insurance companies due to fraud dwarf theft in other industries.Retailer shrink The (theft) rate is 1.6%. wholesaler/Inventory shrinkage is expected to be 4%.
Insurance fraudsters may defend defrauding insurance companies because it is considered a victimless crime. poll Among attitudes toward insurance fraud, nearly 9% of respondents believe insurance fraud is not wrong or criminal because they believe “insurance companies cheat people, so it’s fair” and “I pay them enough I got my money.” The survey showed that a high proportion of respondents (28.6%) believed that insurance fraud was “not a real crime” (8.5%) or constituted “a business practice without real victims” ( 20.1%).
The Many Forms of Insurance Fraud
Insurance fraud comes in many shapes and sizes.This ranges from registering your car in a state other than your state of residence (because you can “save” hundreds of dollars on fees and insurance there) to the recent discovery that plan Defrauded Medicare of $2 billion.
Some of the main types of insurance fraud (in order of largest to smallest fraud amount) are:
|Insurance Fraud Categories
|description or example
|Estimated annual fraud amount
|Failure to report a medical condition, purchasing life insurance on another person’s life and murdering them, faking one’s own death
|Medicaid and Medicare
|Providing unnecessary services
|property and casualties
|causing accidents, arson
|Provider bills for services not provided
|Misclassification of employees or underreporting of wages
|Worker claims he was injured on the job, but that’s not true
|While training for a 10-kilometer run, he claimed that he was disabled and had limited mobility and was not suitable for a wheelchair user.
|Operated alone or run as profit centers by criminal groups
(Source: The Impact of Insurance Fraud on the U.S. Economy. Alliance Against Insurance Fraud. 2022. https://insurancefraud.org/wp-content/uploads/The-Impact-of-Insurance-Fraud-on-the-US-Economy-Report-2022-8.26.2022.pdf)
A disturbing generational trend
Whether someone considers insurance fraud a crime depends in part on their age.Reporting present The results of the “Who Am I?” study show that respondents aged 45 and above are more likely to view insurance fraud as a crime. For the youngest respondents, ages 18 to 24, the figure was just under 65%, and among those 65 and older, it was 96%.
(Source: Who Am I? Who Commits Insurance Fraud? Why? Alliance Against Insurance Fraud and Verisk. 2023. Used with permission. https://insurancefraud.org/wp-content/uploads/WHO_ME_STUDY_REPORT.pdf)
this “Who am I?” Investigation It was also found that respondents under the age of 45 reported significantly higher levels of dishonesty than previous generations. Respondents under the age of 45 were found to be more likely to “definitely… file a claim for a vehicle involved in a previous crash,” file a claim against a homeowner or insurance policy for damage caused by an earlier incident, and “definitely help a medical provider file a claim with insurance The company charged me for treatment I didn’t receive.”
As older generations age, insurance companies should be concerned that they will increasingly handle respondents’ self-reports as they become less scrupulous about insurance fraud
dark side story
Some of the most chilling examples of insurance fraud are horrific incidents that reveal the darkest sides of human nature:
- John Gilbert Graham To pay for his life insurance, he placed a time bomb on his mother’s plane. The bomb exploded, killing all 43 passengers and crew except Graham’s mother.
- utah doctor Farid Fata Chemotherapy was given to hundreds of women who did not have cancer. Fata submitted $34 million in fraudulent claims to Medicare and private insurance companies.
- Ali Elmezayan A freak car accident claimed the lives of his two autistic children and nearly drowned his wife. He received an insurance payout of $260,000, but his crime was discovered. He was sentenced to 212 years in prison.
- Chicago federal grand jury indicts 23 defendants in fraud plan Scammed $26 million from 10 life insurance companies. The scheme featured the submission of fraudulent applications to obtain insurance policies and misrepresentation of the identities of deceased persons.
There are thousands of other equally horrific stories of insurance fraud. Annual “Dirty Dozen Hall of Shame” Report Describes some of the most egregious behavior and helps understand the extent to which fraudsters will go to defraud insurance companies.
How to deal with insurance fraud?
There are several organizations fighting insurance fraud. 42 states Insurance department conducting fraud investigation unitIn other states, such as Colorado, insurance fraud investigations are handled by the attorney general’s office. The Fraud Unit is staffed with anti-fraud and criminal investigators who work with federal, state and local law enforcement officials to investigate criminal insurance fraud cases. If states are involved in fraud, or if the case is large, the FBI may pursue the case criminally. Insurance companies also have internal special investigation units (SIUs).
New developments—artificial intelligence
Improvements in predictive models and the introduction of artificial intelligence (AI) have enhanced insurers’ ability to identify and ultimately investigate claims that may be fraudulent. But at the same time, artificial intelligence is also being used as a weapon to penetrate insurance companies. Fraud detection system. Techniques being used include artificial intelligence to create fake photos of specific makes and models of cars, showing damage that is not realistic but used to extract claim payments. Some insurance companies are no longer accepting photos because they may have been doctored and are returning adjusters to inspect allegedly damaged cars. A sinister life insurance scam involves using artificial intelligence to manipulate a person’s voice so that a criminal third party bypasses the insurance company’s voice recognition technology and initiates the return of the policy to non-policyholders, with each additional layer of protection the insurance company seems to add. The criminal will then follow, if not move forward.
Insurance companies need to step up their efforts to prevent insurance fraud germs. They should educate the younger generation that whether they think otherwise or not, insurance fraud is indeed a crime. In today’s populist political climate, big business, including insurance companies, is often seen as criminal in too much isolation. Responsible for any malpractice that may occur.as we have argued elsewhereWhat’s more, the younger generation’s image of the insurance industry is shaped by the pledge to put it up on billboards for insurance companies.
Insurers should also join forces with other parties to combat insurance fraud, including state insurance department fraud units, local and federal law enforcement, and organizations such as the Alliance Against Insurance Fraud and the National Insurance Crime Bureau. The fight is likely to become more intense if younger generations with negative views of insurance become policyholders, but it will have to be fought if fighting insurance crime is to be a driver of lower insurance rates.
interested in Fraud?
Get automated alerts on this topic.