IRC: Public Approval Falls for Padding Insurance Claims

Several justifications policyholders may use when falsely inflating their insurance claims—from reclaiming past premiums to the deductibles they have to pay—are getting less approval in the public eye, according to a recent survey.

In fact, public approval of padding a claim to “make up for premiums paid in previous years” has fallen to a record low, according to the results of an Insurance Research Council (IRC) survey of 2,000 American adults. The survey was conducted last summer online and published in “Insurance Fraud: A Public View, 2013 Edition.” The survey found that about 1 out of every 5 respondent thought that padding claims to make up for premiums was acceptable, the lowest rate since the IRC first posed the question in a 1981 survey.

In addition, nearly 1 out of every 4 survey respondents said they were OK with padding an insurance claim “by a small amount to make up for deductibles,” a smaller amount than the more than 1 out of 3 respondents that said the same in a 2002 phone survey, according to the IRC.

VP: Need for Public Education Continues

Elizabeth Sprinkel, IRC’s senior vice president, called the declines “encouraging” but highlighted several of the survey’s findings that she said showed a “need for continued public education.”

Among those findings were that almost 1 out of every 4 respondents said they were “tolerant of claim-padding behavior” while 1 out of every 10 believe that fraudulently altering a claim “doesn’t hurt anyone.”

The survey also identified age- and gender-related skews, with young men being especially accepting of pumping up claims to make up for past premiums. According to the IRC, almost 1 out of every 4 male respondents between 18 and 34 years old said it was “all right” to do so, nearly five times the rate of older male respondents and around three times the rate of female respondents of the same age.

More Support for Prevention, Enforcement Efforts

Insurers typically warn consumers against the commonly held belief that fraud-related crimes are victimless, instead emphasizing the point that the crimes make affordable insurance coverage harder to find.

The IRC repeated such points, with Sprinkel saying in a statement that such crimes have “direct implications for claim costs and the cost of insurance for consumers.”

Such messages may be getting through to the public.

The IRC survey found that several enforcement tactics to fight fraud were gaining public approval. Among those tactics is legislation limiting the access that litigators and medical providers have to police accident reports.

These groups sometimes use the reports to obtain new clients and patients; such legislation saw a “marked increase” in public approval since 2002, which stood at 66 percent in the latest survey.

A high rate of those surveyed also said they were “willing” to take part in additional examinations used by insurers to root out phony claims, with 85 percent saying they were OK with being questioned under oath and 80 percent saying they were OK with independent physicians conducting a medical exam.

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for Patch.com and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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