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Deloitte Report Addresses $30B Fraud Pandemic

Fraud costs P&C insurers $30 billion annually. To mitigate this huge drain on profits, the industry must adopt an integrated, collective approach, says Deloitte.

By Christina Bramlet | Updated on August 15, 2012

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.

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