Four faces of insurance fraud
The needle on America’s moral compass is wobbling
As a nation, we’re backsliding toward higher tolerance of insurance fraud, reveals a national consumer-attitude study by the Coalition Against Insurance Fraud.
Four Faces of Insurance Fraud is the newest national study of consumer attitudes about this persistent crime. Conducted last fall, Four Faces provides a 10-year update of a landmark study the coalition first conducted in 1997.
The slippage in consumer attitudes raises questions about whether fraud fighters are succeeding in influencing public opinion against the $80-billion annual crime. The coalition has repeatedly warned that fraud fighters must plough more resources into public-outreach efforts that today are fragmented, ill-researched and under-funded. “We need the active support of American consumers if we expect to turn the corner on combating fraud,” warns Dennis Jay, the coalition’s Executive Director. “This study is a wake-up call for the entire fraud- fighting community.”
Maybe the best news is that more than four of five adult Americans think a variety of insurance crimes are unethical. That’s a potentially large anti-crime army, if fraud fighters can mobilize them into action.
But the flip side is that about one of five adults—about 45 million people— might well bilk insurance companies under the right conditions, or at least have few qualms when others do it.
This study is a wake-up call for the entire fraud- fighting community.Equally important is that more Americans tolerate a variety of specific insurance schemes than 10 years ago. Note the declines in people who think it’s unethical to:
• Misrepresent facts on an insurance application to lower their premiums (82 percent today, down from 91 percent in 1997);
• File a claim for damage that occurred before the damage was covered (85 percent, down from 91 percent);
• Infl ate a claim to cover the deductible (84 percent, down from 91 percent); and I Misrepresent an incident in order to be paid for an uncovered loss (84 percent, down from 92 percent).
Similarly, more Americans tolerate insurance fraud in general. People generally hold one of four broad attitudes toward insurance schemes (hence the title, Four Faces). The group of adults who tolerate insurance fraud the most—the so-called “Critics”—grew significantly in the last 10 years. More than one of four people are Critics, up from one of five people a decade ago.
The only group that shrunk? People who tolerate insurance fraud the least. The “Moralists” plummeted from nearly a third of adults 10 years ago to a quarter today.
Several forces may help explain America’s ethical uncertainty. For one, more people have negative attitudes toward insurance providers. Fraud-prone attitudes may reflect a backlash.
Some 72 percent of people had a positive attitude toward insurance companies a decade ago, a figure that has dropped to 62 percent today.
Slightly more than half of adults felt positively about the insurance industry as a whole back then, but fewer than two of five are in a good mood today. That’s 90 million adults with a negative attitude—a potentially combustible mixture.
By the same token, wrong simply isn’t wrong anymore. We may be living in an age of moral relativism where many unethical behaviors that once were seen as black and white now have several shades of grey. The warning signs are everywhere.
More Americans tolerate tax fraud and credit card fraud than a decade ago, the coalition’s study shows. This raises the question of whether too many Americans have become moral couch potatoes who increasingly tolerate any kind of fraud, including insurance schemes.
People also increasingly see insurance fraud as a swirling moral gray area. More Americans today think it’s all right to consider the surrounding circumstances when deciding if a given insurance scheme is unethical, the coalition’s study says. Many people ask themselves: Did the scheme damage anyone? How much money was stolen? Is the scheme commonly done by others?
Most Americans also believe insurance fraud is prevalent in America. The implications are potentially important. Wild bears grow bolder and more brazen if they become too-used to humans. By the same token, people may become bolder about fleecing insurers if they believe insurance fraud is a normal part of American life. Everyone does it, so what’s the problem? Why not me? In fact, four of five adults say inflating claims to cover deductibles is prevalent. Nearly four of five think lying both to be paid for an uncovered claim and to lower their premium are commonplace. Seven of 10 think both falsifying receipts or estimates and submitting a claim for damage that happened before buying coverage are prevalent.
But more than four of five consumers do agree insurers should educate the
public about how fraud raises premiums Americans may not be as keen as they once were on jail cells or criminal raps for combating insurance fraud, but most seem to think the power of persuasion can go a long way toward regaining control of the streets.
Read the 1997 study: Four Faces: Why Americans Do and Do Note Tolerate Insurance Fraud.
