Common Terms of Fraud
Insurance Fraud - The intentional misrepresentation of material facts and circumstances to an insurance company to obtain payment that would not otherwise be made.
Hard Fraud - Someone who deliberately fakes an accident, injury, theft, arson or other loss to collect money illegally from insurance companies.
Soft Fraud - When a normally honest person tells “little white lies” to an insurance company.
Intentional Loss - Damage or destruction of property willfully caused with an intent to defraud an insurer excluding arson fraud.
Impact of Fraud Insurance
Fraud loss is estimated per year to be $27.6 billion. Automobile fraud $12.3 billion, business and commercial $1.8 billion, homeowner fraud $1.8 billion and life/disability fraud $1.5 billion. Insurance fraud, the white collars second most costly offense, costs the American public approximately 96.2 billion dollars per year in increased premiums alone. A study in 2001 by Conning and Co. estimated that insurance fraud increases the average American household costs by over $5000.00/year when the rise in premiums, goods and services are taken into consideration. Homeowner fraud which includes property and casualty claims total a sum of about $30 billion per annum. (Insurance information Institute) False claims in the American healthcare system cost the U.S. an approximate $54 billion a year. (CAIF) In Canada, 10-15% of claims paid out are fraudulent. The sum of general insurance fraud inflates costs an estimated $1.3 billion per year according to the CCIAF.
