Insurance fraud has been revealed as a leading contributor to increasing premiums for both car and home insurance, according to a recent report by Clearsurance.com.
The report listed various factors, including car accident and claims histories, higher repair costs, and traffic violation records.
Insurance fraud, however, plays a more significant role in contributing to higher consumer premiums, costing the industry a staggering $40 billion annually, according to estimates by the FBI.
While staged accidents, fabricated injuries, and unnecessary lawsuits are often associated with insurance fraud, even something as small as lying about an address can have a significant impact on insurance premiums, the Clearsurance report said.
Melanie Musson, an insurance expert with Clearsurance.com emphasized that while policyholders cannot control all factors related to increased insurance rates, they can take steps to keep their premiums affordable.
Inflation has also had a notable effect on the rising cost of insurance, according to the report.
Since the COVID-19 pandemic, there has been a sharp rise in new and used vehicle prices. Supply chain issues and worker shortages have also led to higher repair costs. Both situations have left insurance providers responsible for covering more expensive vehicles and repairs, resulting in higher premiums for policyholders.
Weather events, such as hurricanes, tornadoes, and wildfires, are another factor driving the increase in insurance costs. Just in the past year alone, natural catastrophes have caused widespread damage that led to global economic losses of $275 billion, as noted by a recent Swiss Re report which identified Hurricane Ian as 2022’s “costliest event.”
Similarly, the risks associated with weather-related losses have changed the way insurance providers offer coverage. For example, the high risk of hurricane damage in Florida has resulted in many insurers restricting coverage based on the age of the home or roof, according to Clearsurance.com.
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