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Despite years of ongoing efforts to identify and curb insurance fraud, it remains a significant problem. Conservative estimates from the Insurance Information Institute (I.I.I.) place the figure for annual P&C payouts on fraudulent or padded claims at more than $30 billion. A further disturbing statistic suggests that 10 percent of losses and loss adjustment expenses (LAE) are associated with fraud and abuse. Thus, a carrier with $100 million in direct written premium (DWP) and running at a 70-percent combined ratio is likely leaking more than $7 million annually because of fraudulent claim activities.

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