Fraud Caused Up to $9B in Additional Claims Last Year | #phishing | #scams

According to a new report from the National Insurance Crime Bureau (NICB), fraudulent claims cost insurers between $4.6-9.2 billion in extra disaster claims in 2021, a cost that is eventually passed down to consumers by way of insurance premiums. 

In preparation for NICB’s Contractor Fraud Awareness Week (May 23-27), the company is releasing a slew of data and educational materials to inform and educate companies on how to identify and avoid scams of all types. 

“Disasters can bring out the best in people as they rush to help those in need. Unfortunately, disasters can also attract predatory contractors looking to defraud and deceive disaster victims,” said David Glawe, President and CEO of the NICB. “After most disasters, these shameful contractors use well-rehearsed, predatory practices to exploit stressed disaster victims when they are most vulnerable. As a result, survivors pay these bad actors who do little or no work.” 

By their estimate, the NICB believes that fraud adds between 5-10% to the total claims following a disaster. It a similar study by the FBI in the aftermath of Hurricane Katrina, the agency found that fraudulent claims cost the government about $6 billion of the $80 billion in reconstruction funds. 

The sheer amount of fraud that occurs plays a major role in rising insurance rates across the country. 

In Florida, for example, contractor fraud is one element contributing to increasing premiums, insurer insolvency, and consumers scrambling under deadlines to find an insurer to meet mortgage lender requirements. In some instances, homeowners in Florida are signing with non-admitted insurers. 

The NICB believes that one way to reduce fraud is through consumer awareness. The hope is the because of the close relationship between consumers and contractors, consumers will be able to identify potential fraud which will protect them and their wallets. 

“NICB agents, along with our law enforcement and insurance partners, are on the ground immediately following disasters looking for fraudulent contractors,” added Glawe. “However, we need disaster victims and the general public’s assistance in identifying these unscrupulous players.” 

Anyone with information concerning insurance fraud or vehicle theft can report it anonymously by calling toll-free 800.TEL.NICB (800.835.6422) or submitting a form on their website. 

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