Is Auto Insurance Fraud Significant Enough To Change Your Premiums?
Every motor vehicle driver is affected by high insurance prices. Insurance firms use the money they receive from you to pay for outstanding claims and accidents that happen. When an insurance company pays for a claim that is real and legitimate, there is no problem. However, a huge problem is when insurance firms lose a lot of money as a result of fraud. A rough estimate of the fraud claims in Canada over just this year alone is half a billion dollars. Unfortunately this cost is paid by us, the drivers and the customers of insurance companies.
In a recent article, Grant Robertson and Tara Perkins discuss the personal injury insurance scam industry and how it has involved in recent years. In this article, they showed a fast growth in personal injury scams in Canada as a result of increased security in the United States for these types of events. Despite the changes, even south of the border, other forms of fraud still persist. The article displays some methods to abuse the loopholes in the system and also shows us why it is so hard to fight fraud.
If the authors are right, then it means that people who commit these types of insurance fraud are under very low risk. When one looks at the number of times fraud is committed and at how many individuals are ultimately prosecuted, it is clear that the risk of getting caught is minimal while the financial gains can be quite significant. The lack of risk appears to be especially true for the medical providers involved and the profit potential is huge, as they bill relentlessly for services that are never delivered.
While fraud can (and is) prosecuted where it is uncovered, it appears that to really reduce the incidence of insurance fraud of this type a great deal more effort will need to be expended by both industry investigators and law enforcement agencies. The cost of hiring and training investigators is significant, but the returns may well be worth the investment if the number of prosecutions increases as a result of stepped up investigations. Conversely, if the risk of prosecution remains low, the logical conclusion would be that the chance of fraud will continue to escalate, especially in Canada.
The Robertson and Perkins article concludes by suggesting that if policy holders truly grasped the significance of the losses involved due to auto insurance fraud, they would demand that additional investigations be conducted to reduce the incidence of fraud. With the US under more scrutiny, Canada seems like the next target down the list. While there is no way to positively determine how much auto insurance premium money could be saved, it is obviously significant.
Link for the article is: http://www.ctv.ca/generic/generated/static/business/article1850088.html
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