Insurance fraud is a deliberate deception perpetrated against or by an insurance company or agent for financial gain. Fraud may be committed at different points in the insurance transaction by applicants for insurance, policyholders, third-party claimants or professionals who provide services to claimants. Insurance agents and company employees may also commit insurance fraud. Common frauds include “padding,” or inflating actual claims, misrepresenting facts on an insurance application, submitting claims for injuries or damage that never occurred, and “staging” accidents. According to the Coalition Against Insurance Fraud, insurance fraud costs the U.S. $308.6 billion annually.
The biennial study by the Coalition Against Insurance Fraud and SAS reviews how insurers use anti-fraud technology, their fraud detection strategies, and future plans to expand technology in this area. The 2021 study found that 80 percent of respondents currently use predictive modeling to detect fraud, up from 55 percent in 2018.
The 2022 Insurer SIU Benchmarking Study published by the Coalition Against Insurance Fraud found that on average, study participants saw an increase in SIU staff at 1.4 percent from 2021 to 2022 lower than the 2.5 percent growth rates from the two previous studies. Key concerns of anti-fraud leaders include staffing and talent management, legal/regulatory environment and oversight, managing emerging fraud trends, and organization technology challenges and SIU prioritization.
The ease of cross-border travel and the ability to commit fraud in one country when physically located elsewhere afforded by today’s digital environment heighten the scale, cost, and complexity of globalized insurance fraud. According to a 2021 study by the Coalition Against Insurance Fraud, Globalization of Insurance Fraud, insurance fraud fighters have not prioritized mitigation of international fraud despite the consensus that it has increased in the past few years. More than a quarter of 271 respondents spanning 33 countries said globalized fraud is not a priority, and more than half said it was a low-to-medium priority. Yet 39 percent are somewhat concerned about fraud in the future, 37 percent are very concerned, and 12 percent are extremely concerned. Only 43 percent of the respondents are somewhat confident in their resources to combat fraud.
Click here for key state laws against insurance fraud.