Why Insurance Investigations
Insurance claim investigations are utilized to combat the prevalence of false, exaggerated, or fraudulent claims by employing several data collection methods to determine the legitimacy of the claim. Not only can the investigation process reveal potential fraud in a claim, but it can also assist the claims adjuster in making an educated, well-informed decision about how to proceed with handling the claim. By identifying fraud or illegitimacy early in the claims process, insurance adjusters can avoid paying significant costs to a fraudulent claimant.
There are
two categories of insurance fraud: hard fraud and soft fraud. Hard fraud refers to when a policyholder purposely destroys property with the intentions of collecting on the insurance policy. Soft fraud, which is much more common, exists when the policyholder exaggerates information on an otherwise legitimate claim, or intentionally withholds pertinent information on their policy application in an attempt to obtain a lower premium.
Insurance fraud comes at great costs to the insurance companies through premium deficits, incorrect reimbursements, as well as overinflated settlements, in addition to unjustified insurance policy payouts. In an effort to recover large payouts, premiums can increase across the board, meaning that fraud not only affects the insurance company, but also businesses and consumers. The Coalition Against Insurance Fraud (CAIF) estimates that fraudulent claims cost the industry more than
$308.6 billion a year. The Federal Bureau of Investigation (FBI) estimates that this figure then translates to cost the average American family between
$400 and $700 in premiums annually.
According to the National Association of Insurance Commissioners (NAIC),
the most common types of insurance fraud, based on prevalence and average cost to the industry, include:
- Life insurance $74.4 billion
- Medicare $60 billion
- Property & casualty insurance $45 billion; auto theft $7.4 billion
- Health insurance $36.3 billion
- Workers’ compensation $34 billion ($9 billion from premium fraud, $25 billion from claims fraud)
As insurance investigators specializing in Michigan No-Fault claims investigations, we pay particular attention to how fraudulent or illegitimate claims can affect the average Michigan consumer. Without factoring in increased premiums due to fraudulent or illegitimate claims, Michigan automobile insurance rates are
81% to 117% higher than the national average. The average cost of liability-only automobile coverage is $1,360 per year, or $113 monthly, while a full-coverage automobile policy can cost Michigan motorists an average of
$3,643 per year, or $304 per month. These premiums are so costly to consumers that it is estimated that approximately
1 in 5 vehicles in the state of Michigan are being operated by uninsured motorists.
It is estimated that
1 in 10 insurance claims are fraudulent, whether that be workers' compensation, property and casualty, or automobile insurance. Fraud in the system can drive up premium costs for all consumers, not just Michiganders, which demonstrates a clear need to fight back and prevent fraud early on. Through an insurance claim investigation – which includes collecting and analyzing claim documents, securing statements from involved parties, locating and interviewing any potential witnesses, traveling to and evaluating the accident scene, photographing any damaged property, conducting surveillance on the injured party or other individual(s) involved, as well as a deep dive into social media profiles – we can provide a comprehensive overview of all critical data needed to make an informed decision into the legitimacy of a claim.
Contact us for a free consultation to determine how our insurance investigators can assist you in processing your claims today!
