“Does a bad economy increase crime?  Analysts have debated that question for years, according to Mike McKee, senior special agent for the National Insurance Crime Bureau.  While it’s too soon for statistics to confirm whether recent events like the mortgage meltdown and an increase in unemployment truly lead consumers to commit more crimes, McKee said at least anecdotally the economic recession is affecting insurance fraud.”

Different types of fraud and the opportunity to commit fraud has taken a toll on all lines of the insurance business according to fraud bureaus. 

Commercial insurance is being hit with the rise in theft of cargo as electronics and other equipment are taken right off the trucks.  Circuit breakers are being ripped out and copper wiring is increasingly stolen from commercial buildings.  

An increase in vehicle giveups has been reported when owners dispose of a vehicle and then claim that their vehicle has been stolen.  Then the owner collects the insurance money and often makes a profit.  Employees of car dealerships are sometimes involved in the theft and/or burning of the vehicle.  And in turn, the owner may purchase a new vehicle as payoff for the help of the dealership employee. 

Workers’ Compensation and health insurance carriers have noticed that people are staying out of work longer and claiming more injuries.  Instead of a hurt arm, now it is an arm and a leg, or back and a shoulder.  The most attention-grabbing trend is employees extending their claim.   In one case, for example, an employee injured his toe, which led to not being able to sleep, then led to sexual dysfunction.   As a result, he had to have sleep and sex therapy along with treatment for the injured toe. 

The loss or disappearance of classic cars and jewelry has risen.  Arson of both homes and vehicles has also increased.  Consumers are burning their homes hoping for an insurance bailout.  Others are claiming smoke and ash cleanup from wildfires to get insurance payoffs. 

Another major inclination is in medical identity theft and provider fraud.  In this situation, a person’s identity along with their medical and insurance information is stolen and fraudulent bills are sent to the insurance company.  Then the insurance company pays the bills to a fraudulent company, while the true insured and his insurance company are unaware that they are victims of a scam.

And unfortunately, there is a rise in insurance agents who are committing premium theft and diversion.  They divert premium checks that are intended for the insurance companies and embezzle them to use for personal use while assuring the insured they are covered. 

Source:    Insurance Journal, April 2009, Patricia-Anne Tom http://www.insurancejournal.com/news/national/2009/04/14/99585.htm