The Coalition Against Insurance Fraud estimates that insurance fraudsters steal at least $80billion worth of insurance payouts every year. Surprisingly,insurance fraud is still often viewed as a victimless offense. Inactuality, insurance fraud does not just affect insurancecompanies, but also costs the average household between $400 and$700 in increased insurance premiums annually, not including healthinsurance fraud.

The true cost of fraud is difficult to nail down because claimscould be inflated, staged or even completely fabricated. In orderto mitigate these damages, state insurance commissioners launchinvestigations into alleged fraudsters and eventually file chargesand seek their arrests. It can often take months, if not years, forlaw enforcement to track down alleged insurance fraudsters who failto appear in court.

States are working with carriers to try to combat fraud, andsome states have developed statutes making fraud a felony incertain jurisdictions. Several states have fraud departments, andencourage carriers to support state fraud actions and usestandardized forms. Some states have statutorily mandated reportingrequirements for insurance companies who detect fraud.

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