Google is nice enough to email me news updates every day. Today’s update came with a story about auto fraud in San Bernardino county. Nice county. Good university. Bad story.
Let me preface this with third comments. First, I believe people who commit insurance fraud should be prosecuted to the fullest extent of the law and should spend a long time in state prison. Second, I believe insurance fraud is a crime that occurs and costs policyholders some money. Third, I believe that District Attorneys offices do a good job prosecuting cases and have an awfully hard job.
The author of the story quotes a San Bernardino Deputy DA as saying that 60 percent of auto insurance claims have some degree of fraud. The San Bernardino DA had 40 convictions last year for insurance fraud. I will give them the benefit of the doubt and say that they had a 100% conviction rate. Even if their conviction rate was 40%, it means they had 100 cases last year.
But 100 cases is only a drop in the bucket of the number of claims filed. 1 adjuster can handle 100 claims in a month. The police do need more training in looking for these cases, but the insurance companies spend a lot of money looking for fraud cases. They have whole units set up to investigate fraud. And some of these people are very good at what they do. (I was trained by Phil Battin at CIGNA a number of years ago. Phil was a great guy and amazing at his job.)
But the problem is not as bad as the insurance companies want you to believe. In my experience from handling real claims, maybe 20% of all claims have fraud. And that is giving as broad a definition to fraud as possible. In all likelihood, the real number is closer to 10%.
Keep an eye out for insurance fraud, but dont think its rampant. And dont think that everyone, or most people, involved in a claim are making a fraudulent claim!