Insurance Fraud: US Initiatives
| Pages | 328-336 |
| Published date | 01 January 1994 |
| DOI | https://doi.org/10.1108/eb025631 |
| Date | 01 January 1994 |
| Author | Mike Dixon |
| Subject Matter | Accounting & finance |
Insurance Fraud: US Initiatives
Mike Dixon
Mike Dixon
is a police sergeant with the
Cambridgeshire Constabulary. He is at
present a part-time student with the
Centre for Police and Criminal Justice
Studies at the University of Exeter.
ABSTRACT
The petty level insurance fraud, apparently
committed by ordinary members of the
community, is costing insurance companies
millions of pounds a year. Those losses are
passed on to the consumer. So it is every-
one's loss. This problem appears to be
prevalent in all Western countries However,
it is in the USA where they appear to have
both learnt and lost the most.
As the problems in the UK are appearing
to reach the scale of those which have
already been encountered in the USA, law
enforcement agencies and the insurance
companies can ill afford to ignore the
lessons learnt by the Americans.
This paper describes the types of insur-
ance frauds and those measures being
undertaken to counter them in the USA. In
so doing, the author has created a typology
of those counter measures being under-
taken.
INTRODUCTION
The British insurance industry in
general, concerns itself with a worldwide
market. The opening of the internal
European Community (EC) borders and
relaxation of financial controls provide
opportunities both for the insurance
companies and the fraudster.
Although there is EC insurance legis-
lation in place, it is apparent that some
countries are losing money. Italian non-
life insurers, for example, had an under-
writing loss of slightly over 1.73 trillion
lira in 1989.1 Vehicle insurance and
fraud are two of the reasons for the
losses. Fraud in Italy has reached the
point where many of the major insurers
are refusing to take on risks beyond the
minimum legal requirements. This is
especially so in some southern regions of
the country.
In France the prospect for insurers
according to some is bleak. It has been
suggested that the present problems
being encountered are not just due to
the crash in the property markets but to
the dramatic increase in vehicle theft.
Arguably this is due to the relaxation of
the borders within Europe. The French
Centre for Insurance Information esti-
mates that with the thawing of the cold
war, it would take 30m cars to satisfy the
demand from the East. The inefficient
criminal intelligence links and the dis-
parity in the standards of living combine
to make the trade in stolen vehicles rife.
Such rises have meant that the average
French car owner is paying an increase
of 20 per cent for his or her car insur-
ance this year.2
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