Abstract
“Insurance Fraud Costs the U.S. $308.6 Billion Annually,” according to the Coalition Against Insurance Fraud. The Coalition, insurance industry sources, and the news media frequently cite the $308.6 billion as an accurate description of the amount of insurance fraud in the United States. That figure is indefensible. The methodology used to arrive at that figure is unsound. For example, the Coalition’s researchers used an estimate of the percentage of fraud in property/casualty insurance claims that is more than a quarter-century old, a percentage that a leading scholar has characterized as “more folk wisdom than fact.“ The researchers did not perform any independent research, they ignored evidence from state anti-fraud agencies that indicates the amount of fraud likely is far lower than the stated figure, and they did not consider the best academic research—or any academic research—on the amount of insurance fraud. Moreover, the Coalition claims to be concerned about all types of fraud but there is no calculation of fraud by insurance companies in the Report. Insurance fraud happens, it is wrong, and it should be prevented, investigated, and punished. But inadequate or biased research leading to indefensible assertions doesn’t help to reduce insurance fraud.