Insurance fraud continually takes more money each year than it did the last from the insurance buying public. There is no certain number because most attempts at insurance fraud succeed. We can only make educated guesses about the extent of fraud and those guesses are from $80 billion to $300 billion a year.
See the video at https://youtu.be/tdmYZjPh5nM
Next to tax fraud, insurance fraud is the most practiced crime in the world. It is perpetrated by members of every race, religion, nationality, sexual orientation, or gender. It is found in every profession. The possibility of a tax-free profit, when coupled with the commonly held belief that criminal prosecution will probably not occur, is sometimes too difficult for even normally honest people to resist.
As those in the insurance industry are aware, many insurance fraud cases go unreported, because the victimized organizations do not recognize that they have been defrauded. Fraud is also not reported to authorities because the victim insurers choose not to report the crimes for fear of bad publicity, or simply because they do not want to deal with the repercussions and expenses attendant on insurers who report fraud to the appropriate authorities.
If each insurer recognized that at least three percent of its gross premium goes to perpetrators of fraud the insurer might be willing to invest more money in its special fraud investigation units. Those who believe they can pass the cost of fraud on to the customers are mistaken.
The truth is that fraud reduces the profit an insurer can make. Those who own stock in insurers should be complaining to the insurer about the lack of effort to protect the profits of the insurer and the dividends the shareholders are entitled to receive.
Insurance fraud is a tort, a civil wrong. Black’s Law Dictionary, 6th Edition, defines fraud as:
An intentional perversion of the truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or to surrender a legal right; a false representation of a matter of fact, whether by words or by conduct, by false or misleading allegations or by concealment of that which should have been disclosed, which deceives and is intended to deceive another so that he shall act upon it to his legal injury.
In simple language, fraud can be defined as a lie told for the purpose of obtaining money from another who believes the lie to be true.
© 2020 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and firstname.lastname@example.org.
Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.
Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.
Read posts from Barry Zalma at https://parler.com/profile/Zalma/posts
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