Insurers: Victim impact statements

Many states have “victim rights” laws that let crime victims make a statement in court during a trial or sentencing. Defrauded insurance companies are encouraged to give victim-impact statements.

  • Fair sentences: Impact statements encourage courts to hand down strong yet fair sentences that accurately reflect the seriousness of a given scheme.
  • Longterm education: Statements will educate judges, juries and news media about fraud and the extensive damage it inflicts on victims. This can have potentially positive effects on future trials, and overall public tolerance of fraud.

Here is useful information to include in a personal victim-impact statement. It will help you better show how fraud has damaged you and/or your insurance company. Here’s a good example of a statement used in court.


Steals billions

At least $80 billion in fraudulent claims are made annually in the U.S., the Coalition Against Insurance Fraud estimates. This includes all lines of insurance. It’s also a conservative figure because much insurance fraud goes undetected and unreported.

Fraud imposes serious financial and personal costs on consumers, businesses, government and our society. Insurance swindles victimize innocent people of every income, age, education level, ethnic background and region of the U.S.


Raises insurance premiums

Insurance companies generally must pass the costs of bogus claims — and of fighting fraud — onto policyholders. This contributes to a premium spiral that can price essential insurance coverage — often state required — beyond the reach of many consumers and businesses.

  • Auto insurance. False injury claims involving staged car crashes are a major reason automobile premiums in New York, Florida and New Jersey are among the nation’s highest.
  • Workers compensation. Premiums are rapidly rising. This stems in part from fake injury claims by dishonest employees, and schemes by crooked employers to illegally lower their premiums. Many smaller businesses, especially, report that workers-compensation insurance increasingly is unaffordable.


Raises cost of goods, services

Victimized businesses must pass the cost of rising insurance premiums onto their customers by raising prices for goods and services. Many larger corporations also spend millions of dollars a year to investigate and prevent fraud such as false workers-compensation injuries and bogus slip-and-falls.


Crime of violence against people, property

People’s health, lives and property often are endangered by insurance schemes.

  • Staged auto crashes. Lives are jeopardized when innocent motorists are maneuvered into car crashes staged by crime rings to collect large injury payouts from auto insurers. A family of three was burned to death when a setup crash went awry after their car was hit by two large trucks on a California freeway. A grandmother in Queens, N.Y. died when her car went out of control after she was maneuvered into a staged crash.
  • Murder for life insurance. Someone murders a spouse, relative or business partner to collect on the victim’s life-insurance policy. Coverage often is worth $200,000 or more.
  • Unneeded surgeries. Patients are maimed, disfigured and forced into lives of permanent pain when dishonest doctors perform unneeded and often botched surgery to inflate their insurance billings. Cancer, spine, heart and eye surgery are among the procedures surgeries inflicted on trusting patients. Many victims are elderly, poor and homeless.
  • Arson. Homes and businesses are burned down for insurance money. The lives of firefighters, family members and neighbors are jeopardized. Numerous people have died or been seriously injured by insurance arsons. Arson fires also often burn nearby homes and businesses — thus magnifying the property damage and insurance costs.


Damaged finances, property

Insurance fraud inflicts serious financial damage on victims.

  • Stolen premiums. Most insurance agents are honest. Yet crooked agents pocket client insurance premium checks without buying the promised coverage. This leaves the clients dangerously uncovered. Agents also increase a policyholder’s premiums by secretly adding unwanted coverage to policies.
  • Shoddy home repairs. A crooked contractor might take a homeowner’s large downpayment then disappear without doing the repairs. Roof repairs also might be substandard, requiring thousands of dollars more to fix the shoddy work. Fraudulent repairs also may not be insured. This can force the victim homeowner to pay up to thousands of dollars out of pocket to finish the work.
  • Ruined credit. Stealing someone’s medical identity to get treatment can leave large hospital bills unpaid when the identity thief suddenly disappears. Such scams can ruin the victim’s credit and jeopardize their ability to obtain mortgages, vehicle and education loans, and other important financing.

— Victims also can spend hundreds of hours and thousands of dollars restoring their credit and medical identity, research shows.

  • Lost jobs. Businesses illegally lower their workers-compensation premiums by lying to their insurer that fulltime employees are independent contractors. That reduces payroll and staff size, and thus premiums. Honest businesses can’t easily compete with firms that illegally reduce large premium costs. Employees have been laid off and hiring frozen.


Victims face shame, despair, losses

Victims can pay a deep personal price. Many victims feel embarrassed, humiliated and violated. Often they face serious and debilitating depression. Their lives and families also can disrupted for long periods of time. And many victims must recover from fraud-inflicted injuries. Lost jobs and savings can

Many victims also must spend considerable time assisting law enforcement and prosecutors as material witnesses.

Families are disrupted when a parent is harmed by false surgery or family finances are drained. Innocent family members also face serious despair and financial setbacks when a parent is jailed and fined for committing fraud.


Spends scarce taxpayer resources

Fighting insurance fraud is a major expense for federal, state and local governments. The efforts, while necessary, divert often-scarce government resources needed to fight other serious crimes:

  • State fraud bureaus. States conduct extensive anti-fraud efforts, funded by taxpayers and insurance companies. Most states, for example, have anti-fraud agencies that investigate suspected insurance swindles and refer cases for prosecution.
  • Police and other law enforcement. Federal, state and local law enforcement all investigate insurance cases, often jointly with insurance companies.
  • Prosecutions. Taxpayer-funded prosecutors devote considerable time and resources to pursuing fraud cases in court. Many cases are complex and require extensive time and expense to earn convictions.
  • Federal government. The federal government annually spends several billion dollars fighting Medicare and Medicaid scams. This diverts scarce taxpayer resources from meeting the important healthcare needs of America’s elderly and poor.