Combating Insurance Claims Fraud: How to Recognize and Reduce Opportunistic and Organized Claims Fraud

An exaggerated accounting of losses. An inflated value for stolen property. A body shop estimate that happens to include pre-existing damage. Medical charges for non-existent conditions. These are all small potatoes, victimless crimes, fair compensation for spiralling premiums and deductibles right?

That attitude seems to prevail among businesses and consumers these days. A 2010 study by Accenture, the Insurance Consumer Fraud survey, found that more than 68 percent of respondents say people commit fraud because they believe they can get away with it. More disturbing is the fact that 12 percent of adults in the US agreed that it is OK to submit claims for items that are not lost or damaged, or for personal injuries that didnt occur.

Such attitudes cost the insurance industry billions of dollars each year. And the things that cost insurers also cost the rest of us. According to the Insurance Information Institute, property and casualty (P&C) insurance fraud strips an estimated $30 billion from the industry each year losses that must be made up in premiums. The National Insurance Crime Bureau (NICB) estimates that fraud is involved in approximately 10 percent of losses, costing policyholders an estimated $200-$300 a year in additional premiums. To make matters worse, the NICB reports that questionable insurance claims rose 7 percent in the US in the first half of 2011 compared with the previous year.

Fortunately, the Accenture survey did find that an overwhelming majority of customers (98 percent) say it is important for insurers to investigate fraud. This white paper will discuss the many techniques and tools available to insurance companies for combating insurance fraud.

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