This Just In: Questionable Claim Referrals Reach Record High in 2012

insurance fraud imageAccording to a recent Claims Journal article there was a 26.7 percent increase in questionable claims (QC) referred to National Insurance Crime Bureau (NICB) between 2010 and 2012, going from 91,797 in 2010 to 116,268 in 2012—a new record.

What is a questionable claim? Good question!

Questionable claims are those claims that receive closer review and investigation by NICB based on one or more “indicators or referral reasons” of possible insurance fraud. Referral reason categories of claims include: property, casualty, commercial, workers’ compensation, vehicle and miscellaneous. Regardless of the referral reason, any intentional or unintentional overstatement of a claim falls in the category of Insurance Fraud.

Did you know that the overstatement of claims (insurance fraud!!) costs the insurance industry and policyholders an estimated $18 billion dollars a year! Truth.

Since insurance companies divide the costs of claims among policyholders, the overstatement of insurance claims simply drives premium costs up resulting in an average of almost $200 in additional insurance premiums for the average American household.

At $18 billion per year, the insurance industry estimates the size of insurance fraud to be about 10-15 percent of the premium dollar. Moreover, estimates from the insurance industry put fraud at nearly 10 percent of the property/casualty insurance industry’s incurred losses and loss adjustment expenses.

What’s the difference between hard and soft insurance fraud?

Hard fraud is a deliberate attempt to either stage or invent an accident, injury, theft, arson or other type of loss that would be covered under an insurance policy.

Soft fraud “opportunity fraud,” occurs when a policyholder or claimant exaggerates a legitimate claim.

Prevention Measures:

  • Reduce insurance fraud opportunities by retaining qualified damage cost engineers & consultants who work to mitigate the overstatement of repair cost and risks early in the claim cycle.

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