Insurance Fraud Can Be Costly
Insurance fraud is one of America’s largest crimes. According to the FBI, the total cost of insurance fraud (non-health insurance) is estimated to be more than $40 billion per year. That means Insurance Fraud costs the average U.S. family between $400 and $700 per year in the form of increased premiums.
A fraud scheme was reported in May 2014 by the Insurance Journal: a Philadelphia, PA auto repair shop submitted $2,311,288 in fraudulent claims over a 4 year period. The fraudulent claims with insurers fell into one of the following five scenarios: fictitious deer accidents; vandalism; vehicular damages from falling objects; enhanced damages that compensated for waived deductibles; and the use of luxury cars in staged collisions to generate large settlement checks. The Philadelphia district attorney’s office charged 41 people in the scheme after a 16-month grand jury investigation.
How does this sort of fraud affect the average consumer?
- Premiums stay high. Auto and homeowner insurance prices stay high because insurance companies must pass the large costs of insurance fraud to policyholders.
- Consumer goods cost more. Prices of goods at your department or grocery store keep rising when businesses pass higher costs of their health and commercial insurance onto customers.
- Businesses lose money. Businesses lose millions in income annually because fraud increases their costs for employee health coverage and business insurance.
- Innocent people are killed and injured. People die from insurance schemes such as staged auto accidents and arson — including children and entire families.
- Employees lose jobs. People lose jobs, careers and health coverage when insurance companies go bankrupt after being looted by fraud thieves.
- People lose their savings. Trusting citizens are bilked out of thousands of dollars, often their entire life savings, by insurance investment schemes. The elderly are especially vulnerable.
- Health is endangered. People’s health and lives are endangered by swindlers who sell nonexistent health policies or perform quick medical care to illegally inflate health insurance claims.
Insurance fraud is a crime. And far from being a victimless crime, insurance fraud victimizes New Jersey residents every day, costing consumers millions of dollars in the form of increased premiums.
More Tips on Insurance Fraud:
- Avoid Insurance Fraud from Fraudulent Contractors
- The High Cost of Insurance Fraud
All content provided in this blog is for informational purposes only. Topics discussed on this blog relate to insurance products and issues in a general application and are not an offer of insurance, a guarantee of coverage, or applicable to specific and individual circumstances. Contact LG Insurance Agency for questions and information specific to your insurance needs.
