Poor Economy - Cause of Insurance Frauds?

It’s only since the financial crisis began that the insurance companies, legal authorities and media have begun to have doubts regarding fraudulent claims. Still, they didn’t have any solid proof for their speculations in order to support the theory that due to the lack of financial resources, some people break the law just to cash on insurance policies.

Recently, a National Insurance Crime Bureau (NICB) report showed an increase in the number of questionable claims, which could be related to possible cases of ‘opportunistic frauds’. The insurance companies have already reviewed these claims and classified it as possibly fraudulent.

Here are some examples given by NICB from the insurance companies’ reports:

“A hail storm causes limited damage to a section of shingles on a house, but the homeowner, seeing the opportunity to get an entirely new roof from his insurance company, deliberately causes more extensive damage. “

“A car owner who is having trouble making payments on a recently purchased vehicle decides to torch the car (suspicious fire/arson), pays someone to take it, or he drives it to a remote area and abandons it (owner give-up). The car is then reported vandalized or stolen. The insurance company writes a check to the car owner, who uses that money to pay off some of or the entire outstanding loan.”

Claims such as suspicious car fires went up by 27 percent since the past year, owner give-ups increased by 24 percent, slip and falls up by 77 percent, and hail damage up by 407 percent in 2009 compared with 2008.

“Desperate times sometimes cause people to take desperate measures,” said Joe Wehrle, NICB’s President and CEO.  “Unfortunately, committing insurance fraud is not the solution to anyone’s problems – it only leads to more problems if you’re caught.”

“Some people think it is okay to cheat an insurance company, but the fact is, they are breaking the law, risking jail time, and causing everyone else to pay more for their insurance coverage.”