Fraud exacts an enormous economic toll on the insurance industry, costing P&C insurers an estimated $30 billion in losses each year. To address the enormity of the problem, insurers must move away from fragmented approaches, says Deloitte in a new report titled, "A Call to Action: Identifying Strategies to Win the War Against Insurance Fraud."

The key to winning the war on fraud, Deloitte explains, is an integrated approach that leverages technology and operational improvements. Deloitte also stresses that although emboldened scammers continute to instigate a constellation of schemes, "soft fraud" represents a sizeable portion of claims-related losses. For the purposes of the report, the firm defines this soft fraud as exaggerated values on legitimate claims or misrepresented information in order to obtain lower policy premiums. By contrast, hard fraud—which is nevertheless pernicious and rampant—is described as deliberate deception, including faking an accident and fabricating a claim.

At present, workers' compensation and automobile insurance lines represent the areas of largest fraud activity for P&C insurers, with the number of fraudulent claims growing at an alarming rate. The National Insurance Crime Bureau (NICB) reported that in 2011 questionable claims for the first time had exceeded 100,000 referrals and had increased by 19 percent compared to 2009, and that specific categories saw even larger increases, such as casualty and miscellaneous types.