Cost to Consumers
Fraud is the second most costly white-collar crime in America after tax evasion. And the specific problem of auto insurance fraud is so widespread that almost a quarter of bodily injury claims resulting from vehicle crashes, and at least a tenth of property/casualty insurance claims, are fraudulent, according to industry studies.
That cost adds up. The Insurance Research Council estimates that excess payments made by auto insurers due to fraud totaled as much as $6.8 billion in 2007. But any statistic involving auto fraud dramatically understates the problem, because it relates only to claims already paid, not to claims dropped by the filer or dismissed due to suspicion of fraud.
And none of these estimates incorporate the "soft" labor costs involved in dealing with fraud, including the drain on businesses, law enforcement, the civil justice system, regulatory agencies and local emergency services. While auto insurance fraud seems to most people like an "invisible" crime, its true cost to the consumer is far higher than we may ever know.
(If you suspect insurance fraud, call the NICB at 1-800-TEL-NICB. You can remain anonymous and may be eligible for a reward.)