In today's challenging business environment, it is essential for property and casualty (P&C) insurance carriers to identify profitable risks and potentially fraudulent claims as early in the policy or claim lifecycle as possible. Rate evasion is one of these identifiable risks. Intentionally providing carriers with inaccurate personal, automobile, or property information is known as rate evasion.

Several recent studies estimate that rate evasion costs personal lines auto carriers more than $16 billion each year, which represents almost 10 percent of the net premiums written. In all its forms, fraud accounts for 10 percent of the incurred losses and loss adjustment expenses (LAE) of the P&C insurance industry, or about $30 billion annually. It adds as much as $300 per year to the premiums for the average U.S. household and accounts for as much as $0.30 of every insurance dollar paid.

Customers who have been identified at the point-of-sale to be committing rate evasion have demonstrated that they are a moral hazard. They seem willing to make mis-representations for profit and will be more likely to inflate future claims.