Study finds insurance fraud costs at a record $308.6 billion annually

Insurance fraud costs the US economy a record $308.6 billion annually according to a new comprehensive study by the Coalition Against Insurance Fraud, the first of its kind in more than 25 years.

The Coalition study, which examined all types of insurance products, said the rising price of fraud penalizes every living American an equivalent of $932.63 a year, or $3,750.52 for the average US family.

“There is a huge and monumental impact that insurance fraud causes to American citizens, American families, and to our economy every single year,” said Matthew Smith, the coalition’s executive director. “We updated our study because regulators of insurance need to know this information, as do legislators in Washington DC and in our state capitals all across America.”

“There is a huge and monumental impact that insurance fraud causes to American citizens, American families, and to our economy every single year.”
— Matthew Smith, Coalition Against Insurance Fraud executive director

The coalition called for carriers to commit to new and more resources to combat insurance fraud and for the formation of a new task force to focus on fraud in each specific insurance line.

The 40-plus page report compiled statistics from such sources as the FBI, the Insurance Information Institute, the Insurance Research Council, the Centers for Medicaid and Medicare Services, the American Association of Retired Persons, the National Insurance Crime Bureau, the United States Government Accountability Office and the US Census, among others.

In the eight categories of insurance studied, life insurance led the pack, contributing $74.7 billion to the overall annual fraud total, followed by Medicare and Medicaid ($68.7 billion), property and casualty ($45 billion), and healthcare, premium, and workers compensation fraud with about $36 billion each.

“Insurance fraud is the crime we all pay for,” said Smith. “Ultimately, it's American policyholders and consumers that pay the high cost of insurance fraud.”

The Coalition was created in 1993 and says it is the nation’s only consumer advocacy organization devoted to educating and protecting American citizens from the cost and damage of insurance fraud. The Coalition consists of more than 260 organizations committed to the fight against insurance fraud, including federal and state agencies, insurance regulators, legislative and insurance trade associations, state attorneys general, prosecutors, law enforcement agencies, the majority of America’s leading insurance carriers across all lines of insurance, and select companies and law firms assisting in fighting insurance fraud.

The last time the Coalition released an overall fraud study was 1995, when the figure was $80 billion, but that did not include some lines of insurance in the updated study. Colorado State University Global’s White Collar Crime Task Force is the research arm spearheading the study with the Coalition.

A copy of the full report can be found here.

Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at doug.bailey@innfeedback.com.

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Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at doug.bailey@innfeedback.com.