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Home » Consumer Information » White Collar Crime » Financial Crimes

Insurance Fraud

The insurance industry in America is reported to collect close to one trillion dollars annually from private citizens and corporations. That makes it a major part of the economy for the entire nation. The hugely profitable nature of the insurance industry has caused it to become a prime target for criminals. Con artists work both sides of the industry - scamming and defrauding both consumers and insurance companies.

The FBI's Financial Crimes Section works together with the National Association of Insurance Commissioners to help identify and prosecute these criminals. They investigate a variety of insurance related fraud.

Arson cases

Following the mortgage crisis, many home owners were unable to continue paying their monthly bills and became subject to foreclosure and even bankruptcy. Some of the people who were purchasing homes, and even investors in the real estate market, became desperate enough to turn to acts of arson to escape their massive debt and make a profit from their insurance policies.

Corporate insurance fraud

Executives of insurance companies have committed fraud by taking money from funds that were held in premium accounts and using them to pay for business expenditures. These funds are intended to be held for the premium holders only, and not meant to be used to provide any type of financial benefit for the insurance company. When these funds are broken into and spent, the statements that are provided to the customers are then falsified in order to hide the taking of this money.

Premiums

Insurance agents may defraud their customers by taking money from their premiums and simply keeping it. Shady agents can raise the rates for their policy holders of their own accord, and pocket the difference. Due to the commonality of insurance rates rising, this type of fraud is very difficult for consumers to detect.

Workers compensation fraud

Groups claiming to provide workers compensation insurance will create legitimate looking websites and advertisements, then offer reduced rates and special incentives to businesses that are willing to sign up with them. These groups, however, are fraudulent and do not provide any pay outs for legitimate claims. The end result is that businesses are out money, injured workers receive no funds and the phony workers compensation companies make money and then disappear.

The insurance industry cooperates with the FBI to help locate and stop the companies that commit insurance fraud. This ongoing problem can cost companies and individuals millions of dollars each year. The FBI is constantly devising new methods to put a stop to these crimes and put insurance fraud artists behind bars.