I don’t condone the methods of Progressive. Here some facts about fraud:
Industry Estimates of Fraud To understand the pervasiveness and impact of insurance fraud, consider the following:
• If insurance fraud were a legitimate business, it would be a TOP Fortune 500 Company
• Insurance fraud is the second largest white-collar crime in the United States, second only to income tax evasion
• Property/casualty insurance fraud cost insurers an estimated $30 billion in both 2004 and 2005, according to the Insurance Information Institute.
• The Property & Casualty industry estimates that 10 to 25 percent of all claims are fraudulent.
Source: Insurance Information Institute
Motivations of Fraud Perpetrators People commit fraud for many reasons. According to a 2003 Accenture Ltd. survey, 49% of people commit fraud because they can get away with it and 30% do it because they need the money.
Many people don’t think of insurance fraud as “stealing.” Of the people surveyed in a 2000 Insurance Research Council Poll, 25% believed that it is acceptable to overstate a claim to cover past premiums and 40% believed that it is acceptable to pad a claim to cover a deductible.
If the sub rosa was conducted in a public place with people openly volunteering confessions of wrong doing then I believe any evidence gained would be admissible. However, I gather from the article that the sub rosa in this case was done in a private setting where people had gathered for private confession. I don’t believe a Court would allow evidence gained in this way to be admitted.
Also, there is a creditable school of thought (and not just my cynicism) which says that there is an element, no matter how inconsequential, of fraud in 100% of all claims. Keep in mind, statistically only one tenth of 1% of all fraud is actually even brought to light by the insurance industry because of the fear of defamation suits by those investigated against insurance companies. You practically have to catch a fraud red-handed in order to even begin to have a case that will be heard.
Interesting stats. If they are right, 25% of your premiums are for fraud.
This means that the victims – honest insureds – should either be content with their roll as victims or help the insurance companies get convictions.
either way u look at it…fraud is fraud and that costs the insurance company lots of money (as in the stats per a prev entry)…the idea, is we need to have those that commit fraud to start paying back restitution w/interests….these folks know full well that they are doing it illegal and have no care, so why not make it sting!…have them work it off some how to the insurance company and the courts for having to bring them to justice due to the amount of money that is lost…
Thank you for your educated response. At least, with my graduate degree in economics, I can spell extremely and not have to work as a claims adjuster that is rewarded for low balling claims and bullying insureds.
tmcitizen64: What? You’re not in the claim business? How do you deal with your aggressive tendencies without bullying and low-balling people who present claims? Life must be really empty for you. Good thing you can post to sites like this one.
Thanks for clearifying, Wudchuck. However I expect companies to treat the cost of fraud the same as a store treats shoplifting. It’s overhead and it must move downline to the sales price.
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I don’t condone the methods of Progressive. Here some facts about fraud:
Industry Estimates of Fraud To understand the pervasiveness and impact of insurance fraud, consider the following:
• If insurance fraud were a legitimate business, it would be a TOP Fortune 500 Company
• Insurance fraud is the second largest white-collar crime in the United States, second only to income tax evasion
• Property/casualty insurance fraud cost insurers an estimated $30 billion in both 2004 and 2005, according to the Insurance Information Institute.
• The Property & Casualty industry estimates that 10 to 25 percent of all claims are fraudulent.
Source: Insurance Information Institute
Motivations of Fraud Perpetrators People commit fraud for many reasons. According to a 2003 Accenture Ltd. survey, 49% of people commit fraud because they can get away with it and 30% do it because they need the money.
Other motivations include:
• Financial stress
• Marital problems
• Bankruptcy
• Opportunity
Many people don’t think of insurance fraud as “stealing.” Of the people surveyed in a 2000 Insurance Research Council Poll, 25% believed that it is acceptable to overstate a claim to cover past premiums and 40% believed that it is acceptable to pad a claim to cover a deductible.
If the sub rosa was conducted in a public place with people openly volunteering confessions of wrong doing then I believe any evidence gained would be admissible. However, I gather from the article that the sub rosa in this case was done in a private setting where people had gathered for private confession. I don’t believe a Court would allow evidence gained in this way to be admitted.
Also, there is a creditable school of thought (and not just my cynicism) which says that there is an element, no matter how inconsequential, of fraud in 100% of all claims. Keep in mind, statistically only one tenth of 1% of all fraud is actually even brought to light by the insurance industry because of the fear of defamation suits by those investigated against insurance companies. You practically have to catch a fraud red-handed in order to even begin to have a case that will be heard.
Interesting stats. If they are right, 25% of your premiums are for fraud.
This means that the victims – honest insureds – should either be content with their roll as victims or help the insurance companies get convictions.
P&C Industry Claims Dollars Fraud amounts to about 10-15% of every claim dollar
either way u look at it…fraud is fraud and that costs the insurance company lots of money (as in the stats per a prev entry)…the idea, is we need to have those that commit fraud to start paying back restitution w/interests….these folks know full well that they are doing it illegal and have no care, so why not make it sting!…have them work it off some how to the insurance company and the courts for having to bring them to justice due to the amount of money that is lost…
Steve,
Thank you for your educated response. At least, with my graduate degree in economics, I can spell extremely and not have to work as a claims adjuster that is rewarded for low balling claims and bullying insureds.
Do you still think I’m hilarious?
tmcitizen64: What? You’re not in the claim business? How do you deal with your aggressive tendencies without bullying and low-balling people who present claims? Life must be really empty for you. Good thing you can post to sites like this one.
Sounds like Wudchuck needs this release. Musta just lost a case.
i actually sell insurance for a major company. fraud hurts companies profit! and the costs to find thost that fraud companies is HIGH!
Thanks for clearifying, Wudchuck. However I expect companies to treat the cost of fraud the same as a store treats shoplifting. It’s overhead and it must move downline to the sales price.