The words Insurance and Fraud are often used together – A serious problem.
Insurer providers of all sizes consider insurance fraud a “serious problem”. In fact, insurers constantly have to increase spending just to try to contain fraudulent activity.
Unfortunately, fraud is not always easy to spot and harder to root out, causing loss ratios to increase while stretching corporate resources to their limits.
Medical insurance fraud is by far the biggest threat facing the insurance industry today. Insurance fraud is a problem that affects everyone — insurers, doctors, governments, and insureds. Anyone can perpetuate fraud, including the insured, the uninsured, dishonest employees, unscrupulous insurance agents, and of course, common criminals.
What is fraud?
It’s any act or attempt by someone to collect money from an insurance company through deception, whether it’s outright lying, a slight “bending of the truth”, or omission of information leading to improper payments that otherwise would not have been.
Insurance fraud costs Americans at least $80 billion a year, nearly $950 for each family, according to the Coalition Against Insurance Fraud.
Healthcare fraud alone costs Americans $54 billion a year. These acts include everything from:
- Fudging on legitimate insurance claims.
- Lying about how, where, and to what degree injuries occurred.
- Actually staging phony accidents.
It’s not just wrong, it’s illegal and it’s enough to make you sick.
Unfortunately, the insurance system is based upon a premise of trust. That seems to be its biggest weakness. A claims examiner, no matter how experienced, is in a difficult and disadvantaged situation when having to match wits with a medical or other healthcare provider. Especially when time and resources are at a premium. This is precisely why the industry depends so heavily upon services such as:
- IME/Peer Review
- Accident Re-constructionists
- Investigation Services
- Organizations like NICB and local Insurance Fraud Bureaus
With the evolution of predictive modeling, carriers have a huge opportunity to close the gap.
Until public perception changes from insurance fraud viewed as a “victimless crime” to a serious threat to our system, the problem will only worsen.
For more information on insurance fraud, visit Coalition Against Insurance Fraud