"Insurance fraud is a huge problem in the United States"

A recent study has revealed concerning trends regarding the tolerance for insurance fraud among certain demographic groups in the US.

The survey published by Verisk and the Coalition Against Insurance Fraud found that Americans aged 45 and younger display a higher tolerance for insurance fraud, with some even expressing envy towards those who commit such acts.

In contrast, 87-96% of older respondents considered insurance fraud a crime, compared to only 75% of those under the age of 45. The percentage continued to decline with age, with only 64% of the youngest group recognizing insurance fraud as a crime.

Digging into these findings, Shane Riedman (pictured), vice president and general manager of anti-fraud analytics for Verisk Claims Solutions, shed light on the factors contributing to Americans’ attitudes toward insurance fraud.

What was the rationale behind the survey?

Insurance fraud is a huge problem in the United States. Recent estimates from the Coalition Against Insurance Fraud, for example, place the total financial impact at more than $308 billion annually. The problem affects just about everyone in the country, and we want to understand why it occurs.

The study aimed to evaluate the factors that drive consumers to engage in and rationalize insurance fraud, as well as their perceptions of insurer practices that potentially influence their willingness to commit such acts.

Additionally, we sought insights from individuals who have committed insurance fraud regarding their motivations and the decision-making processes that led them to engage in fraudulent activities.

What factors do you think contribute to the higher tolerance for insurance fraud among younger Americans?

For decades we have observed higher rates of crime committed by Americans in their late teens and early twenties. Social scientists have widely discussed the concept of “aging out of crime,” describing the fact that as Americans grow older, their likelihood of committing a crime decreases. What’s interesting about this study, though, is the perception found in many younger Americans that insurance fraud simply is not a crime.

A leading factor that contributes to the increased acceptance of insurance fraud among younger Americans is their higher tolerance for non-violent crimes in general.

For instance, compared to over two decades ago, shoplifting today is more tolerated by consumers and numerous businesses alike. The lack of repercussions for such crimes fosters the perception that they are deemed acceptable.

Furthermore, younger Americans tend to view insurance fraud as just a cost of conducting business for insurance companies, assuming that any fraud-related expenses will ultimately be transferred to customers through higher premiums.

The survey also indicated that the percentage of people who consider insurance fraud a crime increases with age. Why do you think this is the case?

Older generations of Americans were raised during an era characterized by a zero-tolerance approach toward all forms of crime. Whether it involved stealing from an insurance company, a bank, or a convenience store, the severity of the offense was viewed uniformly. We think older Americans see crime as a violation of social norms and mores.

In contrast, as answered in the question above, younger members of society show a greater acceptance of non-violent crimes, particularly those related to financial gains for the involved parties. The connection between financial crime like insurance fraud and social norms seems to have eroded over the years and may be continuing to dissipate.

What steps can be taken to educate consumers about the negative impacts of insurance fraud?

Public awareness and education efforts specifically targeted at the youngest Americans could help correct the perception that insurance fraud is not a crime. These efforts could include campaigns focused on educating younger generations that insurance fraud is the crime we all pay for, and the consequences and financial burdens associated with it will directly impact their lives, including friends and family, for years to come.

Organizations like the Coalition Against Insurance Fraud and others have already demonstrated their effectiveness through exceptional fraud awareness campaigns. That effectiveness could be amplified by directing the messaging to young adults and children, thus helping to shape their perception early in their development cycle.

Additionally, the media can play a vital role in discouraging fraudulent activities by promoting anti-fraud stories and reporting arrests and conviction cases.

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