In the homeowners market, fraud by predatory contractors can account for as much as 10% of annual natural catastrophe losses paid for by U.S. insurers, reports the National Insurance Crime Bureau (NICB).
Consumers might see insurance companies as the only victims of insurance fraud. But that could not be further from the truth. Insurance fraud affects all consumers and businesses, with an estimated cost to the economy of $308 billion per year. And the FBI estimates that insurance fraud costs families an average of $4,000–$7,000 in increased premiums over a 10-year period, the NICB notes.
Beyond monetary cost, insurance fraud can devastate the lives of victims — from potentially unnecessary and risky medical procedures to shoddy and unsafe repairs.
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Television shows like Law & Order, Blue Bloods, NCIS, Hawaii Five-0 and many more dramatize the life and work of law enforcement.
While the insurance industry isn’t thought to be responsible for law enforcement, insurance carriers generally police their insurance contracts to help ensure that they pay the appropriate amounts on claims. Occasionally, that requires an investigation, and sometimes it means working with law enforcement. Most property-casualty insurance companies have a special investigations unit (SIU) that is an adjunct to the claims department.
The slideshow above provides a look at insurance fraud and the role of an SIU investigator.
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