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The Soaring Cost of Insurance Fraud

Paul Carroll, Editor-in-Chief of ITL

While we all know that insurance fraud is a massive problem, we now know just how massive: more than $300 billion-a-year massive, just in the U.S.

That figure comes from the Coalition Against Insurance Fraud, whose estimate would mean that fraud costs each person in the U.S. some $930 a year and the average family some $3,750. The estimate is nearly four times as high as the group's previous estimate, in 1995, of $80 billion of fraud a year in the U.S. -- largely because of inflation and because the coalition looked at more types of fraud this time around, but also because the internet has allowed for new forms of cheating. 

“We updated our study because regulators of insurance need to know this information, as do legislators in Washington, DC, and in our state capitals all across America,” said Matthew Smith, the coalition’s executive director. He said the goal is to put a target on fraud, so that, the next time the group produces an estimate, the number will have fallen. “There’s no reason it shouldn’t,” he said. 

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