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