When anyone commits insurance fraud, be it a one-time padding of a personal insurance claim or a conspiracy to submit false or inflated invoices in an effort to boost profits, guess who pays the ultimate price? The consumer. Sure, the insurance company may pay the bills but no one is really "sticking it to the insurance company" - they are sticking it to the policyholders.
After all, as expenses rise, so too do premiums. The Insurance Information Institute estimates that insurance fraud adds up to $30 billion per year in bogus losses. Now, $30 billion is a big number. This is a number that isn't necessarily absorbed as a cost of doing business. No, insurance companies are in business to make money and they pass their expenses on to their customers - even bogus expenses.
In addition to the high cost of fraudulent claims, insurance companies have an additional cost related to this issue - the cost of identifying, investigating, and fighting these claims. It's not cheap to hire teams of investigators or pursue fraud. Not only does the consumer receive higher premiums based on increased losses, the consumer must also foot the bill for investigating and pursuing legal action against fraudsters.
Think about the various policies that you hold. You might have medical insurance, life insurance, auto insurance, homeowners insurance, and workers compensation insurance just to name a few. How much do the premiums of all of your policies add up to each year? Your annual insurance costs add up to a pretty hefty number as well. Considering that you are paying for insurance fraud through increased premiums, suddenly, this problem becomes more relevant.
Now, consider the temptation involved. You pay tens of thousands of dollars for insurance and hopefully will never need to collect. However, if you do, you may be tempted to "get your money's worth" by exaggerating your losses. Others justify insurance fraud by blaming the insurance companies for their unfair practices or lowball settlement offers. The system is far from perfect but adding fraudulent claims to the mix is not the answer.
While many consumers have a lax attitude when they hear of others filing false claims or padding their losses, others are deeply concerned. Why should the rest of us pay for greed? Insurance fraud is a crime and it hurts every policyholder in the nation.
Another way that insurance fraud hurts is that it tarnishes complete industries. For example, the recent indictment of the owner and several employees of Disaster Restoration Inc. has hurt the disaster recovery industry. Consumers wonder if all disaster remediation companies are making their own rules or participating in unethical practices. Drill these perceptions down even further and you'll have consumers wondering if a company that feels it is okay to rip off the insurance companies also feel that it is okay to perform shoddy work or overbill for sub-par products and services.
Whether you're a consumer or a business owner, insurance represents a large part of your budget. How you feel about the cost of insurance may influence how you feel about the so-called "victimless crime" of insurance fraud. However, once you realize that victims do indeed exist and that you are the one who ultimately pays the bill, you may not be quite so willing to sit idly by as others bilk the system.
In short, insurance fraud is wrong. It is unethical. It hurts us all. If you want to see decreased insurance premiums, you must take a stand against insurance fraud. In addition, if you want to see increased profits of your own, taking the high, ethical road is the right choice.
By: Mr. Mark Decherd
Due to the recent economic slowdown which is evidenced by every indicator (except the ones George Bush uses) car and SUV owners with payments they cannot afford are turning to arson to break their debts. This isn't new, however as car arson (or torching) and insurance fraud have been going on for decades.
The problem is that it is now seen in direct correlation to the economy. When the economy is positive, the level of insurance fraud tends to taper off. When the economy experiences a slowdown or negative growth (George Bush would probably call this a lull or some other four letter word) people find them selves with debts that they can no longer afford and are trapped in. As times get more desperate, the higher the number of people willing to burn or have their vehicles burned and risk getting caught.
During the last two years there has been a marked increase in car arson and insurance fraud in every state from California to North Carolina. Yes, there are cars that were really stolen, vandalized and then burned, but there is a marked difference. In cases of true theft, the thief is usually trying to remove anything that could link it back or identify themselves. In the case of a intentional burn in insurance fraud, the arsonist will attempt to make the car become rendered totaled (so far gone it cannot possibly be fixed). Usually, arson investigators will find accelerants were used like gas and other flammable liquids.
Due to this increase in car arson and insurance fraud cases, arson task forces have ben set up in many counties. In California they have even linked new and used car dealership personnel as instigators in many arson cases. Someone comes into the dealership overloaded with debt and wants to get out of a high car payment by trading in their car or vehicle. They find out they are ?up side down?, a term referring to the fact that they owe much more than their car is worth. The salesperson or similar employee, realizing money can be made, refers them to a local arsonist and the car is then burned. There have been numerous published cases like these and they are growing.
The problem here is four fold; people are being sold cars they can't afford, they aren't taking the proper responsibility for their debts, they aren't properly schooled on debt, and the result is an increase in insurance costs for everyone. These can all be fixed. In California numerous consumer protection laws have been passed which obligate the dealer to be more responsible, but more needs to be done like enforcing maximum debt ratios. There should be standard education in secondary schools on debt and money management. If we can offer classes on home economics (cooking), marketing, and UFO's, Madonna, etc? (just look at a Cal Tech class list), then we can offer or make mandatory a class on debt and money. According to many experts like Suze Orman and Anthony Robbins, debt, money, wealth, and happiness can all be learned and taught. A class on debt and money management should also be mandatory for all politicians (Could you imagine how great are economy would be if George Bush envisioned America's economy as his own and tried to cut the national debt instead of tripling it?) Debts are obligations we create and there are legal ways out of debt. Car arson and insurance fraud hurts everyone, not just those who commit it.
Both Mark Decherd & David Maillie are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Mark Decherd has sinced written about articles on various topics from Family, Health and Aquarium Fish. Mr. Mark Decherd Dryout Inc. . Mark Decherd's top article generates over 12100 views. to your Favourites.
David Maillie has sinced written about articles on various topics from Skin Care, Hair Styles and Wrinkles. David Maillie specializes in automotive safety products and information. He holds numerous patents and awards for his patented headlight cleaner and restorer. For more information, tips, safety and money saving products for your auto please visit. David Maillie's top article generates over 74000 views. to your Favourites.