Insurance Fraud Is on the Rise
For years, insurance companies dealt with customer scams quietly. Today, that has changed. As economic pressure grows, fraudulent insurance claims have increased. In response, insurers now watch claims more closely than ever.
Insurance companies use a system called “suspicious loss indicators.” These red flags help investigators spot claims that may not be legitimate.
Why Insurance Fraud Affects Everyone
Insurance fraud is a serious problem in the United States. According to the FBI, fraud costs more than $40 billion each year. Families pay for this fraud through higher premiums.
On average, insurance fraud costs households $400 to $700 annually. Reports also show a rise in fraud cases during tough economic years. In 2009, fraud bureaus saw a noticeable increase in suspicious claims.
Common Red Flags in Insurance Claims
Insurance investigators look for warning signs during claim reviews. Some of the most common red flags include:
Financial stress or heavy debt discovered during an investigation
New or increased coverage shortly before a loss
Missing police reports
Claims involving old or hard-to-value items
A history of frequent insurance claims
Unusual calm after a major loss
Handwritten or questionable repair receipts
These signals do not always mean fraud. However, they often trigger a closer review.
How Insurance Fraud Is Investigated
The Coalition Against Insurance Fraud tracks suspicious claims nationwide. Since 1992, it has developed 23 key indicators used by insurers.
In 2009 alone, over 143,000 requests for claim reviews were submitted. These requests came from insurance companies, rental agencies, and self-insured businesses.
Arson and Insurance Fraud
Arson is one of the most serious forms of insurance fraud. The National Fire Protection Association estimates that 300,000 intentional fires occur each year in the U.S.
These fires cause hundreds of deaths and billions in damage. Yet, only a small percentage lead to convictions.
Final Thoughts
Insurance fraud hurts everyone. It raises costs, strains resources, and delays real claims. Understanding the warning signs helps protect honest policyholders.
As insurers strengthen detection efforts, staying informed matters more than ever.
