Fraud continues to be a thorn in the side of the insurance industry
Fraud remains one of the most costly issues that faces the insurance industry today. Insurers combat fraud in many ways, but are unable to stamp out its existence entirely. While fraud has a significant impact on the financial stability of the insurance industry every year, few consumers understand how fraud affects them. Many people believe that insurance fraud is only a problem that insurance companies have to deal with, but they may be losing money alongside their insurance providers.
Fraud is causing an estimated $80 billion in insured losses each year in the US
According to the Coalition Against Insurance Fraud, a group based in Washington D.C. that aims to combat fraud at every turn, fraudulent activities cause $80 billion in damage every year. Insurance companies are the primary victims of fraud and they experience significant financial losses as a result of fraudulent claims and other such activities. Policyholders are not free from the affects of fraud, however, as insurance companies must find ways to recover the costs that they lose. As such, consumers often feel the impact of insurance fraud in higher premiums and cuts to the benefits that their insurance plans offer.
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Fraud is quite prevalent in the auto insurance sector due to state laws
Fraud is particular rampant in the auto insurance sector. In the U.S., some state laws actually create an environment where fraud is easily executed. States with no-fault auto insurance laws make fraud a particularly attractive practice because insurers are required to pay for medical care no matter where the blame may lie. These laws are meant to protect consumers from the financial problems associated with denied claims, but they may also be supporting fraudulent activities.
Consumers may benefit from a higher awareness concerning insurance fraud
Insurance fraud is a complicated issue in many cases. Consumers tend to have little awareness concerning the prevalence of fraud and how it affects them. Raising awareness of the impact of fraud may help people better understand why insurance companies respond to certain issues by raising rates for coverage.