Insurance fraud is big business in the United States as demonstrated by this infographic. In fact, it makes up 10% of property and casualty insurance loss expenses in the US annually – that’s around $80 billion. Just as shocking, it is estimated that healthcare fraud cost around $75 billion and accounts for 3% to 10% of total expenditure on healthcare in the US.
Rather than declining, insurers expect the levels of fraud in certain categories to increase in the coming years.
Many, otherwise honest people, seem happy to inflate their insurance claims so that they can receive more than is due to them. There are many ways that the insured can commit fraud and it can start right from the time of applying for the service.
Some applicants deliberately misstate or conceal information to benefit from lower premiums. Once insured, it is fair game. It is estimated that around 8% of fire insurance claims result from arson where the insured starts the fire themselves. In the auto-insurance sector, vehicle owners have been known to dispose of their vehicles and then claim that they have been stolen. Healthcare fraud is often committed by the service provider. These types of fraud include charging for procedures and services not rendered, or charging for services for which there was no medical requirement.
Insurance fraud costs the members dearly. The losses must be recovered and the only way to do that is to increase the premiums. It is surprising, then, to discover that only one in five people will report fraud.