Fifty-four (54) percent of insurers globally view fraud as their #1 threat! The harm to insurers’ bottom line is so staggering that the numbers almost don’t seem real:
- U.S. insurers lose a STAGGERING $80 billion annually to fraud (all lines of business).
- False claims cost Australian insurance companies $2.2 billion every year.
- Fraud cost in Europe was estimated at 10% of the total claims amount.
- Fraud is thought to equal 2.5 billion USD per year in Great Britain.
Fraudulent claims drive up premium costs, which can make specific insurers less competitive in a tough industry. Insurers are forced to dedicate valuable human and financial resources to this scourge, taking their focus away from strategic initiatives and their core business.
Fraud Doesn’t Discriminate
Unfortunately, fraud strikes across the different insurance markets, although it seems to hit the property & casualty (P&C) market the hardest.
“Insurance fraud…is most commonly associated with wayward policy holders doing damage to their own property, in order to later file a false insurance claim; think of the proverbial failing restaurant owner who burns down his own business property to recover his debts,” according to Maxime Croll in ValuePenguin, a marketplace analysis firm.
The scope of the damage:
- Fraudulent claims make up 5-10% of all P&C claims (U.S.) and losses – $34 billion every year.
- “Crash for cash” insurance claims cost the UK £340 million annually.
- Fraud costs the U.S. life insurance industry $10-20 billion per year.
- 3-4% of all global life/health claims are fraudulent; 1 in 30 claims is identified as fraudulent.
This “staggering level of criminality” adds $400-$700 a year to premiums for homes, cars and healthcare in the U.S. How can insurers fight this scourge? Stay tuned for Sapiens’ upcoming infographic and eBook on this crucial topic…