Insurance fraud costs consumers billions of dollars each year, according to recent reports. The most costly type of insurance fraud is health care related, but this is also the most difficult type to uncover.
The latest study by Conning & Co., a research firm specializing in the insurance industry, suggests that the figure in 1995 is close to $120 billion in insurance fraud costs to Americans. This is up $30 billion from 1990.
The vast majority of insurance fraud losses occurred in the health care field, followed by property and casualty and then life and disability. According to the Conning study, the types of fraud that are most frequently discovered are not the most costly ones. The discovered percentage is 20 percent for property and casualty, 10 percent for life and disability, and only one percent for health care.
This is in inverse proportion to the amount each type of fraud costs, which is $95 billion for health care, $20 billion for property and casualty, and $5 billion for life and disability.
Some insurance companies are playing an aggressive role in fighting insurance fraud, while others report fraud only because states such as Louisiana require it. According to the Conning study, companies that aggressively fight insurance fraud may have a substantial material edge over those that do not; approximately $5 billion was saved in 1995 as a result of fraud fighting efforts.
"If we aggressively enforce fraud statutes already on the books and pass additional legislation where needed, we can recover the precious health care dollars that are now being lost to fraud," said Commissioner Jim Brown.