You may have noticed that your property insurance is a larger chunk of your budget than it was last year. Insurance rates will gradually increase over time and there are many reasons for this, but one major reason for larger-than-average increases is Insurance Fraud.
According to the National Insurance Crime Board, at least 10% of property/casualty insurance claims are fraudulent. Some types of Insurance Fraud include staged accidents, padded contractor bills, risk misrepresentation, arson and fake auto glass claims. Insurance Fraud costs the United States $80 billion dollars every year (about $950 per family). It is the second most costly white-collar crime behind tax evasion.
The Coalition Against Insurance Fraud reports the following:
Consumer tolerance of insurance fraud has increased in recent years, public-opinion polls reveal. Accenture’s 2010 consumer survey is the latest research to reinforce this finding:
• More than half (55 percent) of U.S. consumers say poor service from an insurance company is more likely to cause a person to defraud that insurer;
• More than three-quarters (76 percent) say they’re more likely commit insurance fraud during an economic downturn than during normal times (up from 66 percent in 2003);
• More than two-thirds of consumers (68 percent) say they believe insurance fraud happens because people believe they can get away with it (up from 49 percent in 2003);
• Some 72 percent of consumers believe insurance companies are capable of identifying fraud (down from 83 percent in 2003). (Accenture Ltd., 2010)
Insurance companies, law enforcement agencies, and state governments all have special divisions to deal with Insurance Fraud. Here in Florida, the Division of Insurance Fraud is the law-enforcement arm of the Department of Financial Services. The DIF exists solely to investigate and fight Insurance Fraud.
As consumers, we are not powerless against Insurance Fraud. Here are some things that you can do:
(1) Only work with licensed contractors. Check their references and get more than one estimate. Insist on all details in writing. If an unscrupulous contractor misrepresents your damages in order to line his pockets, he may render your policy void.
(2) Insurance Fraud is a felony. Don’t file a fraudulent insurance claim.
(3) Familiarize yourself with Insurance Fraud so you can recognize it when you see it.
(4) Report suspected Insurance Fraud. Whether your neighbor exaggerates his storm damage, an auto-glass company approaches you about filing a claim for your ‘broken’ windshield, or your contractor suggests using cheaper materials than he reported to your insurer, you have a responsibility to report it.
NICB (National Insurance Crime Bureau) Hotline: 1.800.835.6422. www.nicb.org
Florida Division of Insurance Fraud Hotline: 1.800.378.0445. www.myfloridacfo.com/fraud
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