Website SurveyFACTS and FREQUENTLY ASKED QUESTIONS
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This page will post questions about insurance fraud received by the Fraud Unit from consumers and companies. Questions relating to fraud will be answered by the Fraud Unit Associate Commissioner, Chief Investigator, Section Chief(s) or other unit investigator(s) depending on the nature of the question. We will keep this page updated periodically as questions are received. If you have a question about fraud or a suggestion about our web site, please send an e-mail to:FraudUnit@tdi.state.tx.us HOW SERIOUS IS THE INSURANCE FRAUD PROBLEM?Insurance is one of the most costly white collar crimes in America, ranking second to tax evasion.* According to the National Insurance Crime Bureau (NICB), 10 percent of property and casualty insurance claims are fraudulent. WHO PAYS FOR INSURANCE FRAUD? Insurance companies, policy holders, taxpayers and the general public pick up the tab through increased insurance rates, higher taxes, and inflated prices for consumer goods and services.* NICB estimates that property and casualty based insurance fraud cost Americans $30 billion per year. In comparison, Hurricane Andrew's devastation totaled $17 billion in damages. If you include other insurance lines like health, life and specialty insurance, the total cost of insurance fraud may exceed $120 billion annually. WHO COMMITS INSURANCE FRAUD?Insurance fraud perpetrators can be members of complex organized fraud rings or a neighbor looking for additional income. People who would never think of committing a crime can find the temptations of claim money from insurance fraud hard to resist. FRAUD HURTS EVERYBODY WHO BUYS INSURANCENICB states the average household pays an additional $200 to $300 in insurance premiums every year to offset the cost of fraud. The "hidden fraud tax" paid in the form of higher prices for goods and services, may increase the cost to $1,000 per year, per family.
Staged or caused accidents, may involve one or more vehicles and individuals causing a collision with an innocent driver who ultimately appears to be at fault.
Paper accidents, the accident only exists on paper. A vehicle may have pre-existing damage which is claimed as occurring during the purported collision. Parties conspire to create illusion of legitimate accident using either pre-damaged vehicles or by intentionally and covertly inflicting damage on the suspect's vehicle(s). Generally, law enforcement is not called to the scene of the accident. Faked and or Inflated Damages, damages to vehicle exaggerated, non-existent, inflated, pre-existing or vehicle damaged at a later point in time. Organized Claim Fraud Ring, collision(s) orchestrated by organized criminal activity involving attorneys, doctors, other medical professionals, office administrators and/or runners and cappers. Exaggerated injury claims, these may result from a staged or caused collision or a fabricated accident at retail establishment. Owner give-up, vehicle owner makes a false report that their vehicle was stolen in order to recover insurance money. Premium Theft, the single most prevalent type of agent misconduct Instances can range from a single theft of minimal amounts to multi-million dollar scams perpetrated on the public and the insurance industry. Health care fraud, medical provider’s bill insurance companies for services not rendered or unneeded tests and procedures.
Padding or inflating an insurance claim, may involve any type of insurance but most commonly occurs with homeowners and auto claims. Generally, these are legitimate claims where additional lost property or damages are reported to increase the claim or offset the insured’s deductible. Senior Citizen Abuse – Fraud, agents and insurers concentrate their marketing efforts on senior citizens. Agents and insurers may abuse their senior citizen customers by overselling, misrepresenting and selling unneeded or even inappropriate insurance products to them. The conduct may at time even be criminal. The most common types of abuse and fraud schemes involve marketing annuities, life and health insurance. Unauthorized or Phony Insurance Companies – A type of scheme that runs the gamut of selling what appears to be an insurance policy or contract. This includes everything from phony insurance cards to offshore insurance companies issuing policies they have no intention of honoring and low cost health insurance plans. Workers' Compensation
These are just a few instances of criminal insurance fraud. In most cases, when a person commits insurance fraud they will also have committed other criminal acts, such as falsifying documents and theft.
When Buying Insurance
When Filing a Claim
When Driving
If You Are In a Collision
*Information provided by the National Insurance Crime Bureau (NICB)
For more information contact: Last updated: 07/23/2009 |