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Americans are generally more willing to see people prosecuted for insurance fraud than they were five years ago, though wide gaps still exist between notions of how to deal appropriately with hard versus soft fraud, according to polling data collected by the Insurance Research Council.
In the IRC’s 1996 Public Attitude Monitor (PAM), at least five percent more Americans thought prosecution was an appropriate action for an insurance company to take when confronted with evidence of serious frauds such as organized rings, false claims and inflated medical bills.
For example, in the 1991 PAM, 69 percent of respondents thought participants in organized rings—including doctors and lawyers — should be prosecuted. In 1996, that figure rose to 75 percent.
Similarly, 61 percent believed anyone claiming injuries when they weren’t really in a car when an accident occurred should be prosecuted. That figure was up from 60 percent in 1991.
There was a consistent increase in the number of people who would favor prosecution of various individuals involved in claims padding schemes as well. The percentage rose from 45 to 51 percent in cases of doctors or lawyers submitting bills for treatments not received, and from 27 to 33 percent in cases of continuing treatment by a doctor or chiropractor in order to get a higher insurance settlement.
In addition, 24 percent of Americans now favor prosecution for instances of auto repair claims padding to cover a deductible, up from 21 percent in 1991.
For the first time, the study asked about cases in which an individual went along with a suggestion from a doctor or lawyer to malinger in order to get a higher insurance settlement. One quarter of Americans thought that person should be prosecuted.
The survey showed similar increases in the percentage of Americans who thought jail terms should be handed out to those involved in the type of schemes described above: involvement in an organized ring (68 percent, up from 60 percent); filing a claim for injuries to a person not in a car accident (49 percent, up from 31 percent); billing for treatment not received (36 percent versus 28 percent in 1991); and claims padding by a doctor, chiropractor or auto body shop (up four percent in each instance). Fourteen percent favored jail terms for those convicted of going along with a suggestion to malinger.
TOLERANCE DECLINES
“The trend over time indicates people are becoming less tolerant of fraud,” said Terrie Troxel, the IRC’s executive director. “They recognize that fraud imposes costs on honest policyholders, and they’re looking for more severe penalties.”
The IRC also asked a number of questions about actions the public would be willing to take to help reduce insurance fraud, and sought opinions about appropriate penalties for soft frauds such as rate evasion.
Americans are much more tolerant of the type of soft fraud often seen in applications for auto insurance, possibly an indication of the extent of these actions. For instance, about one in 10 people think an insurer should take no action when it uncovers a case of failing to list prior accidents and tickets on an auto policy application.
A similar percent believes no action is warranted against rate evaders, either. Neither percentage changed appreciably from 1991.
Of those who did favor some sort of action, the most common response was that the company should simply cancel the policy. About three in 10 people gave that response in each case, about the same number as 1991.
The next most common response indicated that the company should simply correct the erroneous information and raise the premium. Thirty percent of those polled believed this was the appropriate response to rate evaders, while 26 percent gave the same response in connection with cases of failing to list accidents or tickets on applications.
Fifteen percent of those polled believed people caught lying about driving history should be prosecuted, up slightly from 1991’s 13 percent, 12 percent would prosecute rate evaders, identical to the 1991 results.
However, one in five people said the courts should mete out no penalty in these cases, down from one in four in 1991.
A majority said they thought a fine was the appropriate penalty in cases of applications fraud (53 percent) or rate evasion (58 percent); both were up from 1991’s survey (48 and 51 percent, respectively).
FUNDING FAVORED
The study also produced evidence that more people are willing to help fraud investigations and prosecutions of insurance fraud cases, as well as take other actions to reduce fraud. Nearly half of those polled (48 percent) would be “very willing” to pay an extra dollar on their auto insurance policy to investigate fraudulent doctors, lawyers, chiropractors, body shops and the like. Another 29 percent said they’d be “somewhat willing” to pay the extra dollar.
INCONVENIENCE?
People also are willing to take extra steps to insure against “phantom” vehicles, pre-existing damage and other actions an auto inspection can deter. Eighty-eight percent of those polled were either “very willing” or “somewhat willing” to provide a copy of their auto title when the policy is issued, up slightly from 82 percent in 1991.
Similarly, 85 percent of Americans would be “very” or “somewhat” willing to bring the car to the agent’s office for a photo and an inspection when taking out the policy, about the same number as in 1991 (83 percent).
There was a slight increase in the number who’d be willing to “make it easier for your insurance company to get an independent medical examination of any injured people who make a claim.” In 1991, 81 percent were either “very” or “somewhat” willing to go along with the idea; that number climbed to 86 percent in 1996.
The IRC survey included two new questions in 1996, and most Americans responded favorably. Sixty percent are “very willing” to submit to an examination under oath about the facts of an insurance claim, while 26 percent would be “somewhat willing.” Only three percent said they were “completely opposed” to the idea. Nearly identical results appeared when people were asked if they’d be willing to submit the original bills as part of an auto claim. Fifty-eight percent were “very willing,” while 27 percent were “somewhat willing” and three percent were “completely opposed” to the idea.
The IRC also found support for additional fraud-fighting measures when they asked questions about cost containment, Troxel said about three-quarters of the public thought insurance companies should do more investigation to root out fraudulent claims as a money-saving measure.
“Again, it reflects to me that people are becoming less tolerant of fraud,” he said.
To obtain a copy of the complete report, contact the IRC, 211 S. Wheaton Avenue, Suite 410, Wheaton, IL 60187; telephone (630) 871-0255.
This article has been reprinted with permission of the author. It appeared in original form in the March/April issue of Fraud Focus, the publication of the Coalition Against Insurance Fraud.
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