We all know the saying "knowledge is power." Knowledge is what makes or breaks a government or an industry. When there is misrepresentation, it is up to the people or the organization involved to correct it. For insurance fraud, our industry is responsible for educating consumers on how all that bill padding or those extra few dollars added to a claim translate to higher rates for everyone. No one else is going to do it.

According to the Insurance Research Council (IRC) public opinion study released in March, nearly one-quarter of Americans believe it is acceptable to increase an insurance claim by a small amount to make up for deductibles they are required to pay. While this is lower than the 33 percent the IRC found in a 2002 telephone survey, it is still disturbing. Even more disturbing are the responses from the younger generation—those in the 18 to 34 group—particularly males. An astounding 23 percent of young men have no problem with defrauding an insurance company. This compares to only 5 percent of older men, and 8 percent of women in the same 18-to-34 age bracket.

There was some positive news coming from the study: people are beginning to understand that insurance fraud costs them money. The IRC study found that 86 percent of Americans agreed with the statement, "Insurance fraud leads to higher rates for everyone." Unfortunately, 10 percent believed that "insurance fraud doesn't hurt anyone." The Insurance Information Institute puts fraud at about 10 percent.

The little white lies that crop up from time to time on insurance claims aren't so little. They have amounted to billions of dollars in losses each year. During the 5-year period from 2007 to 2011, property-casualty insurance fraud had cost the industry approximately $32 billion each year, causing most economic damage to health, workers' compensation, and auto insurance lines of business.

The National Insurance Crime Bureau, an organization that reviews and investigates questionable insurance claims, found that such claims were up 16 percent last year to a record 116,268, compared to the 100,450 from the year before. Auto insurance saw a rise of 15 percent in questionable claims—34,585—from the year prior, and questionable property insurance claims increased 39 percent in 2012 over the previous year. It seems that as more Americans realize that lying on a claim form is a crime, the swindlers who make a good living from it are getting better at their "job."

It wasn't until the 1980s that insurance fraud began to make a blip on anti-crime radars. Rising insurance costs and growth in organized fraud groups catapulted the effort to pass stronger antifraud laws, but that wasn't—and isn't—enough to end the crime of insurance fraud. Insurers, agents and brokers, and industry groups must educate policyholders and the general public about the importance of insurance, how it works, and how the crime of fraud, whether "soft" or "hard," affects every American.

Every policyholder should see how much extra he or she must pay because of bogus claims or when a claimant wants to add "just a few dollars" to make up for his or her deductible. As we do that, and as those same consumers see the effect of fraud on their pocketbooks, we can finally help them understand that insurance fraud is not something that "doesn't hurt anyone." Once they understand, consumers will see that padded claims and other forms of fraud are theft, plain and simple, and that they themselves are the victims.

Property-casualty insurance is a cornerstone of worldwide commerce. Much of the American economy would grind to a halt without it. Factories, stores, and offices could not face the risk of operating without it. Most individuals would be unable to finance their homes, and many would have difficulty arranging credit for other big-ticket items. Those who could would still face the possibility of financial ruin if they were sued or were involved in serious accidents. Thus, a healthy property-casualty insurance industry is essential to the vitality of the economy and necessary for the security of our nation's people.

Insurance fraud, in all of its many forms, chips away at that economic foundation. In making coverage more expensive for everyone, it increases the chances that a driver will try to escape paying for required liability coverage, or that a young couple will have to risk going without certain coverages for their new home because they can only afford the most basic policy.

Related: Read "5 Steps to a Better Fraud Detection Program"

"10 'Red Flag' Warning Signs of Workers' Compensation Fraud"

"In Fraud Fight, Insurers Succeed With Teamwork"