Fraud Facts and FAQs
Insurance fraud occurs when an insurance company, agent, adjuster, or consumer commits a deliberate deception to obtain an illegitimate gain. It can occur during the process of buying, using, selling, or underwriting insurance. Insurance fraud may fall into different categories from individuals committing fraud against consumers to individuals committing fraud against insurance companies.
According to the Coalition Against Insurance Fraud:
“Fraud occurs in about 10% of property-casualty losses.”
- Insurance fraud steals at least $80 billion every year from American consumers. (Coalition Against Insurance Fraud estimate).
- Medicare fraud is estimated to cost $60 billion every year. (AARP 2018)
- The FBI estimates non-medical insurance fraud to be at least $40 billion every year.
- Property-casualty fraud steals about $30 billion each year. (Insurance Information Institute, March 2020)
- Want the big picture? Share these infographics.
Idaho Code Title 41-293 (4) – Any violator of this section is guilty of a felony and shall be subject to a term of imprisonment not to exceed fifteen (15) years, or a fine not to exceed fifteen thousand dollars ($15,000), or both. The violator shall be ordered to make restitution to the insurer or any other person for any financial loss sustained as a result of a violation.
Career criminals and organized crime groups, medical, legal, and business professionals, ordinary citizens, your next-door neighbor.
You do. Contrary to popular opinion, insurance fraud is not a victimless crime. The cost of this crime is passed onto law-abiding citizens in the form of the increased cost to purchase and maintain insurance coverage. The Conning & Co. study estimated this crime costs families $5,000 each year. This amount includes not only higher premiums, but also the resulting higher prices for consumer goods and services.
In some cases, like if your car insurance company discovers you omitted information on your application while reviewing a claim, the claim may be denied, or your premiums may be raised. You may have to pay the increased amount retroactively. If your insurance company suspects a fraudulent claim, they may cancel your policy altogether. The insurance company will report the fraudulent claim to the Idaho Department of Insurance, and a criminal investigation may be initiated.
Review all repair shop paperwork carefully. Concerns noted in this area may involve one or more of the following:
- Falsely report lost or damaged parts
- Bill for excessive final cost
- Provide final statement containing false and or unauthorized charges
- Charge for genuine parts when aftermarket or junkyard parts were used
- Charge for new parts when bonding or pounding
- Be cautious of repair/body shops that refer customers to medical or legal offices for a fee
and/or organized accident “rings” that stage auto accidents involving one or more of the following:
- Sudden stops in front of you for no reason
- Disregarding or giving up right of way to cause an accident
- No “real” accident – occurred on paper only with phony drivers and passengers – more popular now due to less of a chance of actual injury and less likelihood of police involvement
- Claims that list drivers, passengers, witnesses who do not exist and who claim excessive injuries –especially when compared to vehicle damage
- Driver has temporary vehicle registration and there is prior damage to one or both vehicles
- Unsolicited referrals or contacts by, from or to body shops, legal offices, and medical offices
- Fraudulently report vehicles as stolen or vandalized to collect insurance money
A variety of dishonest techniques may be used to bill the consumer, his or her insurance company and/or public programs, including:
- Treatment not provided or provided by other than doctor
- Alternative treatment provided
- Tests/supplies not conducted or provided
- Cancellation charge for unscheduled visits
- Charges for office visits not made
- Referral fees for services not rendered
- Unnecessary lab or other testing
- A company employee knowingly files a claim(s) for injuries that did not occur
- Receipt of total temporary disability benefits as a result of lying about the ability to work or other employment
- Medical/legal providers bill for nonexistent services or for more time than was spent
- Employer does not obtain Worker’s Compensation insurance when required to do so (three or more full time employees) by law.
- Employer lies about the nature of the work involved or about payroll (number of employees and their salaries) to receive lower insurance rates
- Always remember that if it sounds too good to be true, it probably is.
- Deal only with licensed agents and companies.
- If you have any doubt, call the Idaho Department of Insurance to confirm if an agent or company is properly licensed or if you have any insurance related questions.
- If an agent becomes evasive or does not explain things to your satisfaction, seek other assistance or consider going elsewhere for your insurance needs.
- Do not sign a blank application or claims forms.
- Do not pay insurance premiums in cash without the receipt that has the company or agency name on it and is signed by the agent receiving the payment.
- Keep all your records and proof of payments.