To the old maxim that nothing is sure but death and taxes, insurance companies might justifiably add another category: fraud. But while it is true that fraud always will be with us, insurers are making a serious mistake if they treat the problem as a predictable cost of doing business to be baked into their companies' economic assumptions. In this respect, fraud is more like taxes than death; while undeniably inevitable, there may be more or less of it depending on what one does about it. Unfortunately, too many insurers are insufficiently focused on fighting fraud, resulting in unnecessary costs to themselves, to the industry at large, and to consumers who are forced to pay higher premiums.
World of Outlaws
Far from being a steady-state economic consideration, fraud is a growing problem. Analysts have cited a 63 percent increase in fraud between 2001 and 2005. According to the Coalition Against Insurance Fraud, the total cost of fraud in the U.S. is approaching $100 billion annually — $25.8 billion of which occurs in the property/casualty industry. This gratuitous cost factor is occur-ring at a time when growth in direct premium written in the P&C industry is slowing and profitability has been hurt by successive record hurricane seasons in 2004 and 2005.
Recommended For You
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
