Insurance fraud costs the country $308.6 billion a year, a much higher amount than the $80 billion estimated back in 1995, according to a new report from the Coalition Against Insurance Fraud that …
Insurance fraud costs the country $308.6 billion a year, a much higher amount than the $80 billion estimated in 1995, according to a.
The coalition, when it formed in 1993, commissioned a study to get at the cost of insurance fraud and came up with an estimate of $80 billion, a number that is highly cited. But after 27 years it is both outdated and understated. Adjusting for inflation, that original number would be $155 billion in today’s dollars
The original estimate didn’t include additional insurance lines now tracked by the coalition, which includes 270 member organizations including the FBI, Department of Justice, state insurance departments and every major insurance carrier. The new numbers include health care, workers’ compensation, and life and disability insurance.
To calculate an updated number, the coalition turned to J. Michael Skiba, program director of criminal justice at CSU Global in Denver who has the nickname of “Dr. Fraud” within the insurance industry. Skiba has argued that insurance fraud is viewed as a low-risk and high-reward offense that takes a heavy toll on society. Insurers bear the cost initially, but those costs are then passed through to customers in terms of higher premiums.
That fraud estimate works out to $932.63 per year for every person in the U.S. Across someone living the average number of years, those losses work out to $73,491, according to Matthew Smith, executive director of the coalition.Property and casualty insurance fraud — $45 billionLife insurance fraud — $74.7 billionDisability fraud — $7.
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