These are hard times. A lot of bad things happen in hard times. Businesses cut back, and some fail. People worry about losing their jobs, and some people do. Many people think about where they can cut back on their expenses, and some think about how to get more income. Some of these people may decide one way to get more income is to file additional claims with their insurance company.
Strictly speaking, fraud occurs whenever a policyholder files a claim knowingly making false material representations. If John sells his car to a cousin in another state and then reports it as stolen, that is fraud. If Mary accepts a role as a whiplash victim in a staged accident and then visits a designated physical therapist, that also is fraud. Such actions are easy to label as hard and/or organized fraud–and could be criminally prosecuted with sufficient evidence.
What about Jim saying he needs a couple of weeks more to recover from his workplace back strain? Or Marcia reporting the fire in her living room destroyed a newer and more expensive sofa than actually was lost? These also are examples of fraud but can be characterized as soft fraud resulting from moral hazard.
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