Insurers Must be Proactive Against Insurance Fraud

Insurers Must Stop the Logarithmic Growth of Insurance Fraud

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Fraud is taking more money every year from the insurance buying public. The Coalition Against Insurance Fraud recently revised its estimates from $80 billion a year to announce that insurance fraud takes over $308 billion a year from the insurance industry. The US Department of Justice working with various federal police agencies have taken an active role to investigate, prosecute and convict those who defraud U.S. health programs and federally funded insurance like flood insurance and crop insurance. Yet, the arrests and prosecutions that happen are only creating a small dent in the amount of money stolen from private and federally funded insurance.

Since no one really knows how much is taken from insurers and federal programs – because most succeed – the best estimates, like that made by the Coalition Against Insurance Fraud, is nothing more than an educated guess. People who are actively involved in the investigation of insurance fraud believe that the more accurate estimate is an amount equal to 10% to 30% of premium collected.

Since the property and casualty insurance industry collected $394.8 billion in the first half of 2021 compared to $362.3 billion for the same period in 2020, fraud took in six months $39.48 billion to $118.44 billion a year for that small part of the insurance industry. [https://lnkd.in/g92HZWYR] If the trend continues the amount stolen from the property and casualty insurance industry – a small part of the Coalition’s number – for the year would be doubled to almost $80 billion to $220 billion.

Insurers properly complain that the local district attorneys and police agencies give a low priority to the crime of insurance fraud,

Insurers have good reason to complain. They are universally ignored by police agencies when they report the crime. When insurance criminals are caught in the act they are seldom arrested,and almost never punished.

Insurance is the Only Crime Where The Victim Is Required To Pay For Investigation & Prosecution of the Criminal Or No Investigation Will Be Done

Similar businesses in the financial sector, who are also regular victims of fraud and other crimes are not taxed or compelled to investigate crimes committed against them. No one demands that the Bank of America or Wells Fargo or Chase pay for prosecuting embezzlers or bank robbers.

George Orwell was right when, to paraphrase his novel “Animal Farm”  “all businesses are equal, some are more equal than others.”

Everyone involved in the business of insurance should scream: “I’m mad as Hell, and I’m not going to take this anymore!”