A step-dad who drowned his 3-year old girl in her backyard pool to collect her life insurance, a landlord who set fire fatal to one of his tenants while trying to cash in on property insurance, and a doctor who made a fortune running an illegal “pill mill” that resulted in 68 fatal overdoses … these and a handful of other killers, liars and cheats make up the rogue’s gallery that is the 2010 Insurance Fraud’s Hall of Shame.
The Coalition Against Insurance Fraud compiles these lists annually, highlighting some of the worst and most egregious examples of fraud from the prior year – but they are just the tip of an estimated $80 billion dollar iceberg. Sometimes, fraudsters act alone. Other times, fraud is perpetrated by organized crime rings.
Consumer attitude to insurance fraud can be highly frustrating. Research by the Coalition Against Insurance Fraud reveals, “Two of five Americans want little or no punishment for insurance cheats; they blame the insurance industry for its fraud problems because they believe insurers are unfair.” Many of those who tolerate insurance fraud wrongheadedly view it as a battle between an everyman David vs a large corporate Goliath. But the truth is far different … it’s more a battle between criminals and you. After all, it’s not the insurance companies who take the hit: it is a crime you pay for – money from your pocket. Fraud and theft are business expenses that get factored into the costs that honest people pay for insurance.
The idea that insurance fraud is victimless is a common myth. Besides adding to the cost of insurance for every honest consumer and honest business, thousands suffer even more serious consequences: Every year, people are bilked out of life savings by illegal investment schemes; health is endangered when people are swindled by phony health policies; injured employees and their families suffer when businesses fail to carry legally mandated coverage, and innocent people are killed and maimed in arson and staged auto accident fraud schemes. See videos of common criminal fraud schemes.
If you have been a victim or insurance fraud or suspect insurance fraud, here are some ways to take action.
- Report to your state insurance authority. Many states have specific insurance fraud bureaus
- File a complaint online with the National Association of Insurance Commissioners.
- Notify the insurer – Insurance company fraud hot lines
- Call the National Insurance Crime Bureau Hot Line at 1-800-TEL-NICB (1-800-835-6422). Cell phone users can also text the keyword “FRAUD” and their tip to TIP411 (847411). Or drop an email. Tips can be anonymous.
- Check to see if an insurer or an agent is legit and licensed in your state: State Insurance departments.