Quarter of Americans Give Okay to Defrauding Companies

February 12, 2003

Nearly one in four U.S. adults say that overstating the value of claims to insurance companies is acceptable, and more than one in 10 say they approve of submitting insurance claims for items that were not lost or damaged or for treatments that were not provided, according to a survey released by Accenture (www.accenture.com).

The survey, based on a random sample of more than 1,000 U.S. adults, examined consumer attitudes toward insurance fraud. Two-thirds of respondents (66 percent) said that people are more likely to commit insurance fraud during an economic downturn than when the economy is strong. About half the respondents (49 percent) said that people commit insurance fraud because they can get away with it.

Thirty percent of respondents linked insurance fraud to the offenders’ needs for money, while nearly one-fourth (24 percent) said they believe that the people who commit insurance fraud do so because they believe they pay too much for insurance. Twenty percent said they believe that the offenders commit fraud to compensate for the claims deductibles they have to pay.

“The Insurance Services Office, Inc. estimates that the cost of fraud in the U.S. property and casualty industry is approximately $24 billion, which represents 10 percent of total claims payments,” Michael Lucarini, a partner in Accenture’s Insurance practice, said. “Fraud is a growing concern for insurers, whose aging technology and inefficient processes often prevent them from detecting fraudulent claims, which in turn hurts their long-term profitability. In addition, increased consumer exaggeration to improve the claims payout is becoming more prevalent in the current weakened economy.”

Slightly more than one in 10 of survey respondents (11 percent) said they knew of someone who inflated the value of their insurance claim. These respondents said they believed that these claims were mainly for auto and property/homeowners insurance (47 percent and 39 percent, respectively, of respondents who knew of inflated insurance claims).

Forty percent of respondents said they were unlikely to report someone who has committed fraud. However, 83 percent of respondents said they believe that insurance companies are capable of identifying or preventing fraud-related property and casualty insurance claims.

“The burden is clearly on insurance companies to ensure they have the proper tools, technologies and skills to combat fraud,” Lucarini continued. “Those committing fraud are becoming more sophisticated and advanced in their methods, while many insurance companies still lack the necessary processes and systems to detect and stop fraud. However, leading insurers are implementing Web-based technology that can help re-evaluate claims for fraud during the claims lifecycle and alert the appropriate people when thresholds are exceeded.”

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