Smith: Do You Belong to the Coalition FOR Insurance Fraud?

Monday, May 14, 2018 | 0

The headline is hardly a typo, nor does it refer to the honest organization called the Coalition Against Insurance Fraud.

Matthew J. Smith

I’ve talked with many people about my work with that alliance. Often with a smile or chuckle, I’m asked, “Well, is there also a coalition in favor of insurance fraud?” These humorous exchanges made me realize that there IS such a group. It’s informal, and millions of people belong. Many of us may be active members, or at least complicit.

It seems almost everyone knows someone who has committed, or is committing, insurance fraud. Maybe not a crass arsonist or hardened leader of a large staged-crash ring. Though instead, maybe a coworker, friend or family member who wasn’t injured yet made a false workers' comp or bodily injury claim. Or maybe the person (or ourselves?) who adds just a “little bit” to inflate a claim and compensate for the insurance “hassle,” cover a deductible or get a new TV that’s better than the one that was stolen from the living room.

People can be surprisingly tolerant of this crime, and hence members of the Coalition FOR Insurance Fraud. At least a quarter of U.S. adult consumers believe it’s OK to pad a claim to make up for the deductible. Nearly 20% approve of inflating claims to cover premiums paid in the past. Fully 10% believe insurance fraud doesn’t hurt anyone.

These could be our neighbors, co-workers, friends and family members.

So why would someone join this crime-committing group? Nearly seven of 10 people believe people steal insurance money because they feel they can get away with it.

So how many “members” belong to this nefarious coalition? The U.S. has slightly more than 325 million people. This means 65-80 million U.S. adults could be fine with padding claims, and more than 30 million feel insurance fraud has no impact on them or our society.

Given the 150 members of the good-guy coalition, we’re outnumbered by thousands of percentage points.

Normally honest consumers may claim we, and perhaps even close friends or family, aren’t members of the dishonest coalition. Yet how often have we heard others, or even ourselves, suggest someone try a false personal-injury claim to line their bank account? Or we know a co-worker who complains of back pain for years, then falsely claims a “new” workplace back injury?

And how many insurers pay a claim, knowing the entire claim or a large portion, may be fraudulent? Yet for a variety of reasons — from getting rid of a nuisance claim to budgetary constraints — the insurer simply pays and quickly moves on.

Those of us who are attorneys are eligible for club membership, too. In more than 30 years of insurance practice, many of the worst claims I was involved in had insurance professionals and sometimes defense counsel as claimants. I recall phone calls directly asking how to maximize the claim payout, and even insurer employees as well as defense lawyers saying this was their chance finally to be on the receiving end of a settlement check. This occurred far too often to be isolated incidents or coincidence.

Far too many of us may be fraudsters indirectly and be complicit by failing to speak out when we see a scam happening.

Will this blog change the equation? No. But blogging raises issues we may not be comfortable talking about. Maybe this blog incited a moral twinge if you made an inflated claim that was a little white lie. 

No one is immune from getting caught up in the world of insurance fraud, directly or on the periphery. Hopefully we may learn and grow more honest, regardless of our role or age. Perhaps the next time we see the dishonest coalition in action, we’ll speak up or report a scam to our insurance department’s fraud hotline. We can act instead of turning a blind eye or unhearing ear.

If we’re willing to take that small step, maybe we can remove one more member from that other coalition and strengthen our own Coalition Against Insurance Fraud.

Matthew J. Smith is director of government affairs and general counsel for the Coalition Against Insurance Fraud.