While they may not often get the attention they deserve, insurance companies play a crucial role on the frontlines in the battle against insurance fraud, protecting honest policyholders from the negative financial impact of deceptive practices that drain more than $308 billion from the system each year.[1] The FBI estimates the average U.S. family pays between $400 and $700 more per year for non-health insurance due to the ripple effects of fraud-related costs.[2] When it comes to health insurance, the National Health Care Anti-Fraud Association (NHCAA) conservatively estimates fraud to account for 3% of total health care expenditures, with some government and law enforcement agencies placing it as high as 10%. [3]
State laws and regulations often mandate that insurance companies implement anti-fraud measures. Whether it is deploying special investigation units (SIUs), reporting to regulatory agencies, referring cases to law enforcement, or developing and delivering fraud-related training to its employees, insurance companies take proactive steps every day to shield consumers from the additional financial burden caused by insurance fraud.
Insurance company SIUs act as the industry’s detectives, analyzing suspicious claims, performing in-depth investigations, and reporting suspected criminal activity. By maintaining SIU units and aggressively investigating and reporting suspected fraud , insurers contribute significantly to consumer protection. The industry also frequently collaborates with counterparts in the insurance regulatory and law enforcement communities through organizations like the Coalition Against Insurance Fraud[4] and the International Association of Special Investigation Units.[5]
Going beyond just complying with state insurance laws, antifraud initiatives create an opportunity for insurers to showcase their commitment to innovation. As with most things in our world today, technology has significantly changed the manner in which criminals commit fraud; fraud detection and reporting are changing on a parallel track. Predictive analytics and artificial intelligence are becoming increasingly important tools used by the insurance industry to identify suspicious claims more efficiently, reducing the overall impact of fraud for everyone.
When looked at collectively the insurance industry’s efforts to detect and report fraud can be seen as a broad-reaching defense network, helping to keep premiums more affordable and coverage widely accessible.
[1] https://insurancefraud.org/wp-content/uploads/The-Impact-of-Insurance-Fraud-on-the-U.S.-Economy-Report-2022-8.26.2022-1.pdf
[2] https://www.fbi.gov/stats-services/publications/insurance-fraud
[3] https://www.nhcaa.org/tools-insights/about-health-care-fraud/the-challenge-of-health-care-fraud/
[4] https://www.insurancefraud.org
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Bri Dahl, MCM
Public Policy Analyst
National Association of Mutual Insurance Companies
