Insurance fraud levels remain steady amid changing public perception

Nearly one-quarter of American males aged 18 to 34 believe it is okay to pad their claims in order to make up for premium payments, a recent study found. In addition, 10 percent of Americans believe that insurance fraud doesn't hurt anyone.

The consumer study, conducted by the Insurance Research Council, shows that insurance fraud continues to be an issue that plagues the industry. However, the good news for insurance providers is that the newest edition of "Insurance Fraud: A Public View" found a 9 percent decrease in consumer acceptance of insurance fraud. In 2002, the same study found that 33 percent of respondents did not object to claim padding.

However, the change in public perception of insurance fraud has not necessarily decreased the instances of insurance fraud in the country. The FBI estimates that insurance fraud costs more than $40 billion per year, meaning the average family pays an increase of $400 to $700 per year on their premiums because of fraud.

A sizable minority of consumers (18 percent) believe that it is acceptable to inflate claims in order to make up the cost of premiums. Two out of five consumers are not very likely to report a claim of insurance fraud to insurers or state authorities, according to Accenture, Ltd, a management consulting company.

Types of insurance fraud

Litigation arising from insurance fraud occurs in a variety of industries. The National Health Care Anti-Fraud Association estimates that 3 percent of the $2 trillion spent on healthcare in the U.S. is lost to fraud. The National Floor Safety Institute also estimates that 3 percent of slip-and-fall cases are fraudulent and cost approximately $2 billion per year. Residential and commercial real estate improvement contractors may chase storms and inflate or invent damage in order to collect on insurance. There is little national data on the amount of contractor home improvement fraud, but the Better Business Bureau has received more consumer inquiries regarding home improvement contractor fraud than any other type of business for the last five years.

Insurance litigation

The nature of the insurance industry makes fraud a problem for many businesses and insurance providers. Many consumers are honest and legitimate disputes may arise regarding insurance coverage, liability for an accident or property damage. However, a percentage of the population may inflate damage claims, exaggerate injuries or otherwise behave dishonestly in order to obtain a bigger payout. Businesses facing such litigation should contact an experienced insurance defense law firm to ensure they defend themselves to the greatest possible extent against such claims.