Annual report - 2008
The State of the Fraud Fight
Facing down a recession, decoding future threats
Economic calamity is a Petri dish for crime. Egged by greed, desperation or both, insurance cheaters never let a good recession go to waste.
America’s economy will rebound, but that may take many months. Until then, fraud fighters could face a pincer movement: Certain insurance schemes may spurt while many anti-crime resources stagnate or decline. We may have to double our efforts just to stay even with this crime.
Today’s once-in-a-generation recession magnifies fraud’s threat to America—and also our opportunity to make the streets safer from predators. Effectively facing down troubled times can wring inefficiencies from the anti-fraud system. This can leave fraud fighters better equipped to repel threats, and improve people’s lives and safety.
"Facing down troubled times can wring inefficiencies from the anti-fraud system."Crime spurts. Is economy-driven insurance fraud spurting? The warning flares are mixed. Among the fraud zones:
Consumer cons. The clearest distress signals come from normally honest consumers whose financial anxiety may be impelling them to seek illicit insurance payouts. More drivers are illegally dumping unwanted vehicles for insurance payouts. People also are burning down their homes to avoid foreclosure, though in much smaller numbers. Homeowner claims for suspicious “thefts” or “disappearances” of valuables such as diamond rings also appear to be rising.
Consumer victims. Schemes against vulnerable consumers also may spread. Among the possible growth cons: growing theft of client premiums by struggling insurance agents, and medical ID theft by uninsured consumers seeking free health coverage.
Small businesses. Hardened criminals also may try to exploit stressed small businesses. Possible hot spots: Fake malpractice, workers comp and health coverage peddled to smaller businesses looking for price breaks.
Workers compensation. More distressed businesses may try to illegally reduce workers comp premiums. This would accelerate a premium-fraud surge that began well before the recession. Rising bogus injury claims by employees also are possible at companies where morale plummets from rising layoffs. Comp claimants at companies that are downsizing may see less reason to get well and return to work where they may find themselves out of a job.
Resources tightening. Anti-fraud resources appear to be tightening on several fronts. Will this materially affect the fraud fight? The answer is open. Some state fraud bureaus are thriving financially, but overall their budgets are stagnant while inflation increases.
Insurer investigative units generally appear to be holding their own on the financial front, but will resources keep pace as the recession keeps gnawing at insurers? This issue needs steady monitoring.
