Recently, the Insurance Research Council conducted an online public opinion poll to ask about John Q. Public's attitude toward inflating claims that are reported to insurance companies. The results were of the "good news, bad news" variety.
The good news is that there was a 9 percent decrease in the number of respondents who thought it was perfectly fine to exaggerate an insurance claim. The bad news is that 24 percent of those polled, virtually one in four, opined that it is acceptable to pad claims to insurance carriers. While that is a drop from 33 percent a decade ago, it certainly continues to constitute a rather large segment of the populace.
Interestingly, a whopping 86 percent concluded that insurance fraud results in higher rates to all purchasers. So people are clearly cognizant of the ultimate downstream impact of inflating claims, yet they consider the practice acceptable nonetheless.
Further findings included 80 percent of the participants were willing to adhere to claim processes that will assist insurance companies in detecting and preventing inflated claims (fraud), such as examinations under oath or independent medical evaluations. Additionally, almost 82 percent of respondents supported the legal prosecution of people committing insurance fraud.
So, let's recap. While one in four postulates that insurance fraud, through inflated claims, is acceptable, almost nine out of ten know it leads to higher premiums for all and eight out of 10 support stiff prosecution.
The idea of inflating claims to make up for past premiums paid is an idea that the majority of homeowners probably think about when something untoward occurs to their property. The logic is elemental; "I have been paying "$X" amount of premiums for X amount of years with no claims. Now that I have a claim, what can be wrong with embellishing the amount of loss to somewhat make up for all that money I've paid the insurance company in the past?"
Although the thought process can be termed "logical," there is obviously a fundamental problem with that line of reasoning. It is defective at its base because it involves a lack of ethics and morals. To knowingly inflate a claim is to commit fraud, as it constitutes a material misrepresentation of the facts.
Transitioning from property claim inflation to bodily injury claim exaggeration presents another dilemma. Exaggerating a bodily injury is far more facile for the average insurance claimant. The residuals of an injury can only be experienced by the person injured, and medical science can only go so far in testing for objective findings to substantiate subjective complaints. Claims professionals have dealt with this problem from time immemorial. The usual result is that bodily injury settlements are inflated. Additionally, the injured parties are not the ones paying the premiums in these scenarios, so they do not have the questionable perceptive crutch of justifying such action as compensation for all of the premium payments they have paid in the past.
As long as these types of polls are taken, a significant amount of respondents will always say that insurance fraud is acceptable. The salient issue remains a lack of moral rectitude.
I think the vast majority of Americans have no issue in delineating right from wrong. It's a rather simple exercise. The breakdown comes when it's ones' self-interest to be less than candid or forthcoming because the person will profit more from dishonesty. This moral hazard confronts many of us each day. Whether it involves lying to shield one's self from justified criticism, or inflating an insurance claim to monetarily profit, the crux of the matter is an ethical and moral one.
Moral character is the bedrock of personality. Immoral or amoral individuals are always going to be with us. It is not that they don't understand right from wrong, it is that they ignore the moral obligation to do the right thing. To be unencumbered by conscience is to allow ones' self to engage in all types of reprehensible behavior, with insurance fraud being one of those.
Although we can take comfort (if not solace) in the decline of intentional claim exaggeration according to this latest survey, do not expect this fraud phenomenon to disappear any time soon. It is more reflective of the overall societal moral and ethical behavior than a strict insurance dilemma, which also makes it far more depressing to contemplate.
April 15, 2013
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