Accident Insurance

Accident Insurance Fraud

Accident insurance fraud occurs when someone knowingly lies to obtain some benefit or damages to which they are not otherwise entitled or someone knowingly denies some benefit or damages that is due and to which someone is rightfully entitled. Accident insurance fraud is a very serious issue.

Depending on the specific fraud involved, an alleged wrongful act may be handled as an administrative action by the Department of Insurance or the Fraud Division could handle it as a criminal matter.

Current law states that the Fraud Division should investigate various felony provisions of the Penal and Insurance Codes. Usually, accident insurance fraud investigations conducted by the Fraud Division are involved when someone is suspected of filing a fraudulent claim or other related crimes. In most cases, actions investigated by the Fraud Division involve criminal situations involving automobile property and personal injury, workers' compensation, health insurance and residential and commercial property claims against insurance companies.

Different state and federal laws also permit the Fraud Division to pursue its cases in federal proceedings. In those cases, the crime of accident insurance fraud is usually pursued as mail fraud, criminal racketeering or some other type of federal offense.

Accident insurance fraud has a huge impact on everyone, not just the insurance industry. The cost of accident insurance fraud is estimated per year to be $27.6 billion. Automobile fraud $12.3 billion, business and commercial $1.8 billion, homeowner fraud $1.8 billion and life/disability fraud $1.5 billion.

It has been shown that accident insurance fraud costs the American public approximately 96.2 billion dollars per year in increased insurance premiums alone. A study in 2001 conducted by Conning and Co. estimated that accident insurance fraud increases, for the American public alone, household costs by over $5000.00/year when the cost rises for premiums and goods and services. Homeowner accident insurance fraud, which includes property and casualty claims total a sum of about $30 billion per year stated by the Insurance Information Institute. Accident insurance fraud claims in the American healthcare system is reported to cost the U.S. an approximate $54 billion a year. Canada reports that 10-15% of accident insurance claims paid out are fraudulent.

It seems that the majority of people who commit accident insurance fraud don't think they're hurting anybody directly. In fact, the thinking is that they're hurting major corporations who have enough money that they don't care anyway. As evidenced by the figures above this is simply not the case.

There is now a planned national policy for the US to deal with organized accident insurance fraud as there are groups that make this their actual business. There is a Home Office fraud review in preparation and the Association of National Insurers have put into operation a plan to share information with regard to suspicious claims.

This group will sort through millions of claims and work together with other insurers to get a broad idea of the crime patterns of these groups. This new Insurance Fraud Bureau will then work with the police in an effort to recover money which has already been paid out, via civil prosecutions against these persons committing accident insurance fraud. Accident insurance fraud costs everyone and can be a big business and this is why it is no longer being taken lightly.