31 Insurance Fraud Statistics Everyone Should Know

31 Insurance Fraud Statistics Everyone Should Know

When you think about insurance fraud, you probably picture someone setting fire to their garage in order to solve a cash flow issue. But it goes far deeper than that.

The industries most impacted by insurance fraud have proved to be healthcare, workers’ compensation, and auto insurance.

In this article, we’ll go through 31 shocking insurance fraud statistics that you should know so you can be more vigilant about this crime in the future.

What's Ahead...

1. Fraudulent Claims Dteal $80 Billion Annually Across All Lines Of The Insurance Business

Fraud has an enigmatic nature, and its methods become more intricate and clever by the day. Insurance fraud is challenging to identify and quantify in terms of precise financial damage.

Throughout the course of an insurance transaction, fraud can happen numerous times. Insurance applicants, policyholders, third-party claimants, experts who supply claimants with services and equipment, and insurance agents can all be portrayed as the main characters in widespread fraud schemes.

2. Property And Casualty Fraud Cost Around $30 Billion Each Year Between 2013 And 2017

Insurance fraud statistics show that estimating the true cost of insurance fraud is a difficult task.

Scams extend beyond the payment of unjustified fees and claims to achieve fraud prevention.

In the grand scheme of things, fraud not only deprives consumers of their money and convenience but also stifles innovation.

3. 78% Of Americans Are Concerned About Insurance Fraud

Although Americans have long been aware of the harm that insurance fraud can inflict, they have recently demonstrated a greater level of tolerance for it.

For instance, according to statistics on insurance fraud from a 1997 poll, 93% of respondents thought it would be unethical to submit a false claim, compared to 88% in the most recent survey.

Similarly, from 91% to 84% of respondents said it was unethical to inflate an insurance claim.

4. 13% Of Business Owners Are Concerned That Their Employees Could Commit Workers’ Compensation Fraud

Workers’ compensation fraud is broken down into two categories: claimant fraud and premium fraud.

A worker who commits claimant fraud typically fabricates work-related ailments, stages accidents, exaggerates valid claims, or tries to game the system to obtain more benefits than they are legally entitled to.

On the other hand, employers are the ones that perpetrate premium fraud, and its most prevalent manifestations include misrepresenting payroll and misclassifying workers.

5. 5.1 Billion Healthcare Robocalls Were Made In 2018

Most people link annoying but mostly damaging telemarketing campaigns with spam calls. But there’s more to these irritating calls.

Consumers are the main audience, and the goal is to sell them needless medical equipment or fake health insurance.

The majority of the time, these malicious setups use the private medical data obtained through scam calls to defraud health insurers.

6. 3% To 10% Of Total Healthcare Expenditure Amounts To Fraud Each Year

Scams affect both the public and private sectors. Statistics on health insurance fraud from both public and commercial insurers show that the US healthcare system lost between $81 billion and $270 billion to fraud in 2011.

According to data from the National Health Care Anti-Fraud Association, $2.27 trillion was spent on healthcare in 2011, with 3 to 10% of that total going toward false claims.

7. Around 4 Billion Health Insurance Claims Are 

Even though they only make up a small portion, each false insurance claim is expensive.

It’s interesting to note that the Health and Human Services secretary issued a public alert concerning the growth of fake health insurance policies just days after expanding access to affordable health insurance for more people.

8. 425 Healthcare Offenders Were Federally Sentenced In Fiscal Year 2018

In total, 69,425 cases were submitted to the United States Sentencing Commission, and 5,948 of those involved theft, property damage, or fraud.

In the fiscal year 2018, 7.3% of these offenses were healthcare fraud.

9. In 2017, Estimated Medicare Fee-For-Service Improper Payments Were $36.2 Billion And Medicaid Fee-For-Service Improper Payments Totaled $41.2 Billion

Medicare is a nationally funded health insurance program for people over 65, people with low incomes, and people who are medically necessary.

In 2017, more than 10% of overall expenses were a result of improper payments, which are defined as payments for services that are not appropriately documented.

10. 86.8% Of Healthcare Fraudsters Federally Sentenced In Fiscal Year 2018 Had Little Or No Prior Criminal History

According to research conducted in 2018 by the United States Sentencing Commission, the average age of a fraudster at the time of sentencing was 49 years old.

The majority of medical offenders were white (38.7%) men (65.2%) who were also US citizens (87.1%).

According to statistics on medical insurance fraud from 2018, the median loss for these acts was $1,048,375 and involved defrauding both public and private health care organizations.

11. 1 In 10 Americans Provide False Information Or Omit Important Data When Buying Auto Insurance

According to an online study, 27% of Americans elected to exclude a driver from the report, while 40% of Americans reported decreased annual driving mileage.

According to other intriguing auto insurance fraud statistics, 10% of people provided an incorrect ZIP code when indicating where the vehicle would be stored.

Additionally, one in ten people misrepresented the location of their family car, recreational vehicle, or motorcycle.

12. Auto Insurance “Premium Leakage” Is A $29 Billion Problem

When underwriting information is ignored or misrepresented, it can result in inadequate insurance and reduced premiums, which is known as premium leakage.

Some of the most popular schemes involve applicants purposefully giving false information and brokers persuading claimants to lie in order to lower their rates.

13. No-Fault Scams Cost The Average Two-Car Family In Florida $100 In Increased Auto Premiums

No-fault insurance, commonly known as personal injury protection insurance (PIP), pays for medical costs and enables policyholders to file a claim with their own insurance provider for any monetary losses. This system is, however, weak.

The unscrupulous medical professionals and lawyers who commit motor insurance fraud by inflating genuine claims are a problem for insurance fraud bureaus in all no-fault states.

14. Excess Payments Attributable To Fraud In Auto Injury Claims Totaled Between $5.6 Billion And $7.7 Billion In The United States In 2012

According to statistics on insurance fraud, the majority of these false claims are related to chiropractic adjustments, physical therapy, and complementary and alternative medicine.

15. 52% Of Household Auto Policies Are Subject To A Change Of Vehicles Or Drivers Annually

Additionally, nearly 30% of American households update their cars each year.

Every change in circumstances might be seen from the perspective of a fraudster as a chance to fabricate a fraudulent certificate of insurance.

Although insurance firms offer consumers a straightforward way to notify changes, many changes are not even declared.

16. 1 In 5 Americans Think It Is Acceptable To Plot Against Insurance Companies Under Certain Conditions

Many Americans support insurance fraud, despite the fact that the remaining four out of five survey participants believed that insurance crimes were unethical.

According to 68% of consumers, the most frequent insurance fraud continues to occur because of the belief that offenders can get away with their crimes without causing any harm.

31 Insurance Fraud Statistics Everyone Should Know (1)

17. 21% Of Bodily Injury Claims And 18% Of Personal Injury Protection Claims That Ended With Payment In 2012 Appeared Fraudulent

According to insurance fraud figures from 2012, Florida (31%), New York (24%), Massachusetts (22%), and Minnesota (22%) had the highest percentages of exaggerated or outright faked personal injury claims.

Examples of build-up include fabricating a totally false account of an incident or exaggerating the severity of an injury or loss.

18. Approximately 20% Of Life Insurance Claims Are Denied During The Contestability Period

The time frame during which an insurance company looks into claims is known as the “contestability period.”

When only insurance issued to younger insureds is considered, the rate of denied claims is considerably higher than 20%.

19. Life Insurance Fraud Costs The US Insurance Industry Between $10 And $20 Billion Annually

In a poll by the Reinsurance Group of America, medical deception, agent fraud, and criminal fraud were cited as the most alarming types of fraud.

Paramedic fraud and rebating topped the list of frauds that are hardest to spot.

20. 36% Of Homeowners Cite Fraud As Their Biggest Concern When Hiring Contractors

According to statistics on insurance fraud, one of the most prevalent contractor scams involves an unlicensed operator taking advantage of a distressed homeowner following a natural disaster.

Shady contractors demand big cash deposits in exchange for their services, then vanish without finishing the job. Another typical issue is subpar construction and inexpensive materials.

21. Insurance Fraud Stole $6 Billion Of The $80 Billion The US Government Allocated For Reconstruction After Hurricane Katrina

The catastrophic Hurricane Katrina, which caused extensive wind damage and tremendous floods, also paved the stage for significant insurance fraud.

Around 1.6 million insurance claims were made, totaling $34.4 billion in insured losses, and the storm caused almost $100 billion in damage.

22. An Average Of 261,330 Intentionally Set Fires Were Reported To US Fire Departments Each Year Between 2010 And 2014

According to the US Fire Administration, there are a variety of factors that cause renters’ or property insurance offenders to intentionally start fires. These include crime concealment, vandalism, and, of course, profit.

A crime that is motivated by the possibility of financial benefit is an insurance arson.

23. Arsons Caused $1.3 Billion In Direct Property Damage Over The Five-Year Period From 2007 To 2011

Arson statistics are challenging to track, according to the Coalition Against Insurance Fraud.

However, there is sufficient evidence to conclude that, according to FBI data, the number of arson offenses fell by 5.4% in the first half of 2015 compared to the same period in 2014.

24. The Average Sentence For Health Insurance Fraud In 2018 Was 30 Months

The penalties for insurance fraud may differ from state to state. Depending on the kind and scope of the false insurance claim, a fraudster may be charged with a felony or a misdemeanor.

25. In 22 States And The District Of Columbia, Insurers Are Obligated To Create And Implement Programs To Help Reduce Insurance Fraud

Insurance firms are forced to actively combat fraud because fraud schemes get more sophisticated every year.

Insurers employ specially educated personnel to look into suspicious claims and stop insurance fraud, working together with law enforcement and the National Insurance Crime Bureau, a non-profit organization devoted solely to combating insurance fraud.

26. 46 States And The District Of Columbia Have Set Up Insurance Fraud Bureaus

In certain states, fighting fraud at various phases of the insurance process is the focus of more than one agency.

These law enforcement agencies report increases in the number of cases opened, convictions, and court-ordered restitution, in addition to tips concerning suspected insurance fraud.

27. In 4 States And The District Of Columbia, Insurance Fraud Is Considered A Specific Crime

The two types of insurance fraud—soft fraud and hard fraud—can be broadly categorized. The former entails planning before the occurrence, while the latter is typically brought on by an opportunity.

28. In 2017, The North Carolina General Assembly Budgeted $2.4 Million To Hire Additional Agents To Investigate Insurance Fraud

The number of arrests in connection with alleged insurance fraud nearly doubled between 2016 and 2018, according to the Criminal Investigations Division of the North Carolina Department of Insurance, thanks to the additional investigators funded by the state.

29. Insurers Write Off At Least 10% Of Their Claim Costs On Fraudulent Claims Every Year

In a 2012 poll by the Property Casualty Insurers Association of America and FICO, 45% of 143 US insurers said that between 5 and 10% of their claims expenses are attributable to fraud.

30. 84% Of Insurance Organizations Claim That Fraud Cases They Examine Involve At Least Two Industries

As they become more sophisticated, complicated fraud schemes frequently cross over into other industries rather than focusing solely on the insurance sector.

According to statistics on fraud, insurers are negatively impacted by 61% of all cross-industry fraud instances.

31. 61% Of Insurance Companies Associate The Increase In Fraud With Difficult Economic Times

According to insurers interviewed by FICO in 2012, personal property, workers’ compensation, and auto insurance will be most affected by the rising cost of insurance fraud.

Final Word

It’s good to know these insurance fraud statistics so you can be better prepared if you are ever unfortunate enough to fall victim to it. You should keep these statistics in mind when understanding the ins and outs of insurance fraud.