What is Property and Casualty Insurance Fraud
P&C insurance fraud is any untruthful activity related to purchasing or selling policies offered by property and casualty insurers. Examples include submitting false information on an application for a policy, lying about the cause of a claim or the extent of damage caused by a claim, exaggerating medical expenses related to an injury claim, and filing multiple claims for the same incident.
Property and casualty (P&C) insurance fraud is a globally growing problem. It's estimated that P&C insurers lose billions of dollars yearly to fraudsters who submit false claims for money or services they are not entitled to receive. Still, it's not only the insurers that lost the money. Everyone pays the cost, even consumers.
In this blog post, we will look at what P&C insurance fraud is, how it affects the price of premiums, and what can be done to prevent it.
How Does Fraud Affect Insurance Premiums?
According to the Coalition Against Insurance Fraud, fraudulent activities result in a financial loss of $308.6 billion annually for businesses and consumers. Furthermore, the FBI estimates that the average family pays between $400 and $700 yearly in insurance premiums due to fraud.
P&C insurance fraud drives up the cost of premiums for honest policyholders because insurers have to pass on these losses through increased rates. In addition, when fraudulent claims are detected, they must be investigated and adjudicated in court—which further drives up costs for insurers and their customers. This means that everyone pays more when someone commits insurance fraud.
What Can Be Done To Prevent Insurance Fraud?
Insurance companies can take several steps to reduce their exposure to P&C insurance fraud. These include:
Conducting thorough background checks on new applicants.
Verifying documents submitted with applications or claims.
Using predictive analytics software to detect suspicious activity or behavior patterns among policyholders.
Implementing anti-fraud employee training programs.
Partnering with law enforcement agencies to investigate potential cases of fraud.
But that does not mean that there are no challenges. Read our post on fraud detection challenges.
Who gains from P&C Insurance Fraud?
No one wins in cases of P&C insurance fraud—not the insurer, consumer, or even the perpetrator themselves, who will face harsh legal penalties if caught engaging in such activity.
Although there are measures that insurers can take to reduce their exposure to such behavior – such as conducting background checks on applicants and using predictive analytics software – ultimately, it's up to all parties involved in the industry (insurers, policyholders & consumers) to work together to combat this crime effectively.
Doing so will help ensure everyone pays fair premiums while protecting honest individuals from wasting their hard-earned money on fraudulent claims.
How can Legentic help you uncover the truth and fight fraud?
Legentic Mohawk is the holy grail of auto insurance claims and SIU departments, providing access to up to 8 billion data documents collected from over 22 countries. Through this powerful platform, you can unlock a world of possibilities, streamlining your workflow! Legentic Mohawk is sure to set any SIU or claims team alight:
Detect fraud with multiple search criteria
Export data with high-quality images in a PDF format for easy sharing and reporting to focus on detecting the crime instead of reporting.
Don't miss a new case update with our alerts and automatic notifications when new data is found.
Take preventative action, and reduce your risk of financial loss by identifying trends in historical digital behavior.
Streamline your process with advanced filtering features, including date, price, and domain, to quickly locate the most relevant data.
Boost your reports, track your findings, and fraud investigations with customizable tags.