According to the April 2015 issue of Best's Review, the U.S. Bureau of Labor Statistics shows the number of "claims adjusters" at 51,200, down 6.06 percent from a year earlier. (It was down over 7 percent the month before.) The number of "third-party administrators" is 160,400, up 2.43 percent from April 2014. Meanwhile, the Insurance Information Institute's Fact Book 2015 reports that "questionable claims" increased by 15.9 percent between 2011 and 2012 and in March of 2015 that "property/casualty insurance fraud amounts to about $32 billion a year, according to industry estimates." That's up from previous estimates of $29 billion. The industry estimates that fraud costs about 10 percent of the PC industry's incurred losses.

What's wrong with this picture? I asked Barry Zalma, of the Claims' Advisory Board and a frequent columnist, if it wasn't just a bit disingenuous (if not downright dishonest) for the insurance industry to claim all this loss from fraud while at the same time laying off adjusters so that the remaining staff has little or no time to investigate properly and perhaps prevent some of that loss, then pass the fraud loss onto policyholders.

Barry replied, "Reducing staff is not fraud. It is, however, stupid. No one knows how much insurance fraud takes [but] the best guesses I have seen are 3 percent of collected premium, $80 to $300 billion. You can't increase premium fast enough to cover fraud, [but] can make money refusing to pay fraudulent claims by hiring professional claims people who recognize it and know how to gather enough evidence to prove fraud."