Insurance fraud is on the rise.
The National Insurance Crime Bureau (NICB) reports a 23 percent rise in questionable insurance claims from 2008 to 2010¹. With insurance fraud increasing in America, most states have established fraud bureaus to help fight it.
How does insurance fraud impact you? Fraudulent claims can lead to higher insurance premiums for everyone, costing billions each year². These types of crimes are difficult to prevent and prosecute, but you can help fight back. Learning more about insurance fraud can help you identify and report it.
Top ten cities with the most staged accidents³.
1. Miami, FL
2. Los Angeles, CA
3. Houston, TX
4. Chicago, IL
5. Philadelphia, PA
6. Tampa, FL
7. Cleveland, OH
8. Orlando, FL
9. New York, NY
10. Boston, MA
There are many types of fraud.
Fraud can be difficult to identify because it comes in many forms, but there are two main types you should be aware of: hard fraud and soft fraud. Hard fraud is a criminal act that physically and/or financially harms an innocent victim. Soft fraud is an exaggeration or lie told to receive a payment or lower a premium.
What is hard fraud?
Hard fraud is a deliberate act intended to defraud an insurance company. From faking a slip and fall to intentionally causing a car accident, there are many forms of hard fraud. Specific examples of hard fraud include:
- Staged auto accidents — When a driver plans to force another driver into a collision and a planted witness tells the police that the victim is at fault.
- Planned vehicle theft — When a car owner has a partner steal his car and sell, destroy or strip it for parts.
- Staged home robbery — When a homeowner has a partner rob her home, but keep the belongings in a storage facility until the insurance claim is approved.
- Double billing and phantom patients — When health care providers bill insurance companies for procedures that never happened or patients who never existed.
What is soft fraud?
Soft fraud is more common than hard fraud and involves deliberately exaggerating or lying to receive a payment. Soft fraud does more to increase premiums than hard fraud. Specific examples of soft fraud include:
- Missing drivers — When a family fails to inform their insurance company that there are two teen drivers in the household, not just mom and dad.
- Over-reporting — When people inflate the value of computer equipment stolen from their home.
- Lies about location — When people use someone else's address to register and insure their car, or when people report driving half the total number of miles they actually drive.