Fraud against insurance companies and individuals occurs every day. It is hard to know exactly what the insurance fraud costs are on a yearly basis, but estimates put the number at somewhere around $30 billion a year. That’s billion with a ‘b’. Imagine how much this costs honest policyholders in extra premiums every year. It is possible that insurance fraud adds an additional ten per cent on to our insurance premiums, depending on the company and the product.

Most states have fraud bureaus to handle cases of insurance fraud. They have varying power from state to state but their general mandate is the same. These bureaus were set up in an effort to stem the tide of insurance fraud which was on the rise. The agencies as a whole have reported that the number of tips that they get about suspected cases of fraud have increased, resulting in more cases and more convictions. It seems that this measure is having a degree of success in prosecuting criminals committing fraud.

The variety and the amounts involved are indeed staggering. For Auto Insurance Fraud, the total estimated fraudulent claims came to somewhere between $4.8 billion and $6.8 billion for the year 2007. These numbers come from statistics released by the Insurance Research Council’s study in a November 2008 study, “Fraud and Buildup in Auto Insurance Claims: 2008 Edition.” Payments of fraudulent claims for auto injury coverage, personal injury protection and bodily injury fell into the range of 13 to 18 percent though 2007 according to the IRC. Further findings indicate that the incidence of claim build up is also prevalent. Claim buildup is when an otherwise legitimate claim is inflated in an effort to get more money from the insurance company. In 2002 this number was estimated at 18 percent of total claims, and for the year 2007 this number has risen to 20 percent. The study by the IRC looked at over 42.000 cases of auto injury claims that had been closed with payment made. The study encompassed fifty eight percent of the private passenger market. It is entirely possible that the numbers estimated were less than the actual total because of the fact that they were closed cases.

Perhaps one of the most telling sets of statistics comes from the individuals in society themselves. According to a study conducted by the Coalition Against Insurance Fraud, one out of five people polled believe that it is acceptable under certain conditions to defraud an insurance company. The percentages of people that found certain practices unethical dropped in the categories of falsifying information to lower premiums, filing a claim for damage that happened before the coverage was in place and inflating a claim to cover a deductible. These lower percentages occurred over the period from 1997 to 2008. It seems that it has not taken us long to change out minds about how acceptable it is to commit insurance fraud.

Tough financial times seem to have made people more prone to committing insurance fraud but be warned; the fail safe measures that are in place are more robust than they have ever been and committing this kind of crime might not be seen as a big deal by many but it still is to law enforcement.