One in Three Americans Say It’s Acceptable to Inflate Insurance Claims, But Public Acceptance of Insurance Fraud Is Declining

MALVERN, Pa.- One in three U.S. adults-33 percent-say that it is all right to exaggerate insurance claims under certain circumstances, according to a recent Insurance Research Council (IRC) survey. These respondents agreed that it is acceptable to increase the amount of an insurance claim by a small amount to make up for a deductible. Just over one in five respondents (22 percent) agreed that it is acceptable to increase the amount of a claim to make up for insurance premiums paid when no claims were made. In contrast, fewer respondents tolerated dishonesty in areas other than insurance, such as exaggerating income or experience in a job interview or withholding information on a loan application or from the IRS.

The IRC has been monitoring public attitudes toward claim padding and other forms of insurance fraud for more than a decade. The 2002 results show that acceptance of claim padding and buildup has been declining steadily since 1997, when acceptance levels peaked. In addition, the 2002 study found that tolerance for specific examples of application and claim fraud dropped considerably since they were last measured in 1991.

“Despite the fact that many Americans continue to tolerate opportunistic fraud such as claim padding, the survey results are encouraging. They suggest that, compared to previous years, the public is becoming less tolerant of all forms of insurance fraud. In addition, the data suggest that Americans are becoming increasingly concerned about the impact of insurance fraud on the cost and availability of insurance. They are also more willing to support strict measures to prevent and prosecute fraud,” said Elizabeth A. Sprinkel, senior vice president, who heads the IRC.

More than three out of four respondents (78 percent) indicated that they were very or somewhat concerned about the issues of auto insurance fraud in their state. More than nine out of ten respondents (92 percent) agreed that “insurance fraud leads to higher rates for everyone” and that “persons who commit insurance fraud should be prosecuted to the fullest extent of the law.”

Most respondents indicated that they would be willing to perform specific actions that would help insurers and law enforcement identify and reduce dishonest auto insurance claims. In addition, respondents increasingly favored prosecution and a jail term for individuals caught committing insurance fraud. However, only 4 percent of respondents countrywide said that they, personally, have reported someone for committing insurance fraud.

The National Insurance Crime Bureau estimates that fraud against property-casualty insurers costs Americans $30 billion per year, which translates into an extra $200-$300 per year per household for insurance premiums. “Public opinion is a key weapon in the battle against insurance fraud,” Ms. Sprinkel said. “As the public becomes more aware of the enormous costs associated with these crimes and less tolerant of fraud and the people who commit fraud, we see increased support for tougher anti-fraud efforts.”

The results contained in IRC’s recently released report, Insurance Fraud: A Public View, were based on data gathered in two separate studies. The first study, which explored public acceptance of insurance fraud and unethical behavior in other areas, as well as underlying attitudes about fraud countrywide and specifically in New York State, was conducted by RoperASW in October 2002. The study consisted of telephone interviews conducted among a national sample of 1,008 American male and female respondents eighteen years of age or older, as well as a supplemental sample of 501 adult respondents residing in New York State.

The second study, conducted by RoperASW in June 2002, consisted of in-person interviews conducted among a national sample of 1,995 American male and female respondents eighteen years of age or older. It explored specific actions by individuals, insurers, and the government to deter fraud.

For more detailed information on the study’s methodology and findings, contact the IRC by phone at (610) 644-2212, ext. 7569; by fax at (610) 640-5388; or by e-mail at [email protected] Copies of the study are available for $35 each in the U.S. ($50 elsewhere) postpaid from the IRC, 718 Providence Road, Malvern, Pa. 19355-0725.