According to a survey by FICO and PCI, 54 percent of U.S. insurers expect an increase in the cost of fraud related to personal insurance. Almost half of insurers estimated that fraud costs represent 5 to 10 percent of their claims volume, while 32 percent reported that the ratio could be as high as 20 percent. The area identified as most exposed to fraud is the commercial auto line with a total of 80 percent of insurers
The majority of insurers attribute the increase in fraud to current economic conditions. Approximately 60 percent expect an increase in workers' comp and auto fraud rings, but only 17 percent of insurers believe the rise of criminal gangs plays a significant role in the rise of fraud.
Growing medical costs are causing insurers to call for meaningful reforms to no-fault insurance systems in larger states in order to avoid situations such as the sophisticated fraud ring in New York that scammed companies for $279 million before being brought down this year.
Overall, insurance fraud likely exceeds $40 billion dollars globally, an amount Robert Passmore, senior director of personal lines policy at PCI, calls a "fraud tax."
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