Insurance Fraud Remains a Serious Problem

02/05/2010

One longstanding problem confronting the insurance industry and consumers has been fraud, because it tends to result in higher rates over time. This may be especially common in the auto insurance and home insurance industries, although no sector is immune from the problem.

In fact, the National Insurance Crime Bureau announced this week that 85,209 questionable claims had been filed in 2009, an increase from the 74,902 reported in 2008. This was said to be an increase of 14 percent.

NICB President Joe Wehrle noted that there has been a noteworthy increase in staged auto accidents, especially those which involve organized crime rings. He added that better reporting methods may have also contributed somewhat to the increase in this area.

Elsewhere, a common form of home insurance fraud involves unscrupulous roofing contractors that will exaggerate or even fake storm damage to a roof to inflate their bill. Some homeowners may engage in similar activities with an eye on profit.

Throughout the recession, many states saw increased insurance fraud as people tried to get out from under vehicle payments and other obligations they could no longer afford. However, people who resort to such tactics put themselves at serious legal risk and produce higher costs for policyholders everywhere.

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