Fraudulent activities are an unfortunate fact of life. In the insurance industry, fraud often takes the form of overstated claims, the filing of multiple claims, filing a claim for an accident you weren’t actually involved in, illegally registering cars in areas that make auto insurance quotes less expensive, and more.Many people assume that when they commit these types of fraud, the only people they are hurting are the insurance executives. Of course, that fact alone is still not a good thing, but the idea that only those at the top get hurt by insurance fraud is wrong, because it is all customers who must pay.
Increased Premiums
The worst fallout of auto insurance fraud is the increased premiums that it causes all insurance clients to pay. In order to cover the cost of the excessive or inappropriate claims, the cost of investigating claims, and the changes in risk that are assumed by the claims, insurers have no choice but to spread the losses by raising the premiums for all policyholders. This means the average customer ends up paying for the fraudulent activities of others.
Increased Paperwork
When frauds are attempted and found, or committed and later discovered, insurance companies understand that they must adjust their processes in order to try to prevent them from happening in the future. This means they will take great pains to have applications and claim forms that attempt to weed out potentially fraudulent activity. This increases your work, however, because all of their insurance policyholders will need to use this paperwork. It also creates an additional expense for the insurance company which is, once again, passed on to policyholders.
Increased Taxpayer Dollars
Some claims require police and arson investigations. When the claims are false, these investigations result in taxpayer dollars being wasted on paying the payrolls of those who must investigate them. This also ties up law enforcement officers when they could be out preventing actual crimes.
Insurance fraud is a problem that we all must consider, even if we are not guilty of committing it. We should take whatever steps are reasonable and safe within our own lives to ensure that those we know and love are not encouraged to commit fraud and that potential frauds are reported to the proper entities.
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