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Does Recession Increase Insurance Fraud?

While reliable, national statistics are hard to come by, anecdotal evidence indicates that the recession has sparked an upswing in insurance fraud. A recent article in Insurance Journal quoted the National Insurance Crime Bureau (NICB) and fraud units in several states. They reported significant increases in fraud-related property losses.

Mike McKee, NICB Senior Special Agent, cited instances where homeowners are “seeking an insurance bailout from foreclosure or general financial distress.”  In California, NICB reported “a tremendous increase in alleged smoke and ash cleanup.”

Howard Goldblatt, Director of Government Affairs for the Coalition against Insurance Fraud, reported escalating fraud in the weak economy. “Fraud bureaus are telling us this. We’re hearing it from the state fire marshals, and we’re hearing about it anecdotally through news stories. It’s clear that as the economy has gone down, the opportunity to commit fraud to recover monies they think they need has increased.”

Barbara Richardson, Director of the New Hampshire Fraud Unit, said the State’s Insurance Division has seen “tons of jewelry go lost or missing in recent months.” Cindy Schmell, Fraud Bureau Chief for the Iowa Division of Insurance, reported rising arson of vehicles and homes. John Standish, of the California Insurance Department’s fraud division, said staged accident rings are increasing.