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Insurance Fraud Statistics

The 2023 Fraud Investigation Unit Annual Report includes statistics about fraud complaints, investigations, and criminal referrals from the newly formed criminal justice agency within the Michigan Department of Insurance and Financial Services.

Schemes cross over

Fraud plots are getting more complex, and often involve multiple industries rather than solely insurance. An insurance investigation, for instance, might reveal evidence of financial fraud.

  • 84 percent of insurance organizations say fraud cases they investigate involve more than one industry.
  • 76 percent of cross-industry fraud cases have a moderate to high impact on insurance organizations.
  • Fraud schemes of high concern: identity theft (49 percent), hacking (45 percent), employee-agent (37 percent) and claims (34 percent). (LexisNexis, June 2016)


Bodily-injury claims

Staged-crash rings fleece auto insurers out of billions of dollars a year by billing for unneeded treatment of phantom injuries. Usually these are bogus soft-tissue injuries such as sore backs or whiplash, which are difficult to medically identify and dispute.

  • Automobile claim fraud and buildup added $5.6 billion-$7.7 billion in excess payments to auto-injury claims paid in the U.S. in 2012.
  • Excess payments represented 13-17 percent of total payments under the five main private-passenger auto-injury coverages.
  • 21 percent of bodily-injury (BI) claims and 18 percent of personal injury protection (PIP) claims closed with payment had the appearance of fraud and/or buildup. Buildup involves inflating otherwise legitimate claims.
  • Buildup was the most common abuse. Claims with the appearance of buildup accounted for 15 percent of dollars paid for BI and PIP claims in 2012.
  • Claims appearing to have fraud and/or buildup were more likely than other claims to involve chiropractic treatment, physical therapy, alternative medicine and pain clinics.

Personal-lines auto insurers lose at least $29 billion a year in premium leakage. This involves missing or wrong information that drivers provide insurers, which inaccurately lowers auto premiums. These losses amount to 14 percent of all personal auto premiums. Among the sources of losses:

  • $10 billion (unrecognized drivers)
  • $5.4 billion (underestimated mileage)
  • $3.4 billion (violations/accidents)
  • $2.9 billion (false garaging to lower premiums)

Medical expenses

Medical expenses reported by auto-injury claimants continue increasing faster than inflation even though injury severity continues downward.

  • Average claimed economic losses grew 8 percent annualized among personal-injury claimants from 2007 to 2012. That’s $14,207 per claimant in 2012, and includes expenses for medical care, lost wages and other out-of-pocket expenses.

Premium rating errors

Dishonest drivers try to lower auto premiums by lying on their insurance application or renewal. Among the ruses: registering vehicles in states where premiums are lower; lowballing stated mileage; and saying a commercial vehicle is used mainly for personal use.

  • Auto insurers lost $15.9 billion due to premium rating errors in private-passenger auto in 2009.
  • Premium rating errors account for nearly 10 percent of the $161.7 billion in personal auto premiums written.
  • Misreporting vehicle garaging address and youthful drivers increased slightly, accounting for more than $2 billion in premium leakage. These most likely involved illicit efforts by policyholders to lower their auto premiums. (Quality Planning, now Verisk Insurance Solutions, November 2011)

Insurer anti-fraud technology

Insurance fraud is rising, and mounting pressure from schemes has ignited a surge of insurer anti-fraud tech deployment:

  • More than 60 percent of insurers say fraud has climbed over the last three years.
  • Nearly 75 percent of insurers use automated systems to detect false claims — a large increase over the 2014 and 2012 studies.
  • Automobile premium evaders are growing targets of anti-fraud efforts.
  • Insurer use of rate-evasion tech has jumped 40 percent since 2012.
  • Use of predictive modeling and link analysis increased 21 percent in two years.




Scams against government and private healthcare insurers form by far the largest type of insurance fraud. The exact size of annual theft is unknown, and is the subject of considerable debate. Healthcare fraud likely steals tens of billions of dollars a year.

  • 478 healthcare fraudsters were federally sentenced in FY 2015. That’s nearly a 14-percent decrease from FY 2013 to 2015.

 (U.S. Sentencing Commission, February 2017)

  • Federal healthcare fraud recoveries totaled $2.04 billion in the first half of FY 2017 (Oct. 1, 2016-March 31, 2017), compared to $2.77 million during the first half of FY 2016. That’s a drop of about $750 million.;
  • The OIG reported 468 criminal actions compared to 428 in the first half of FY 2016. There were 461 civil actions, compared to 383 actions in the first half of FY 2016.
  • $266.8 million was recovered by the Medicare Fraud Strike Force operating in nine regions around the U.S., compared to $116.8 million in the first half of FY 2016.

(U.S. Department of Health & Human Services, June 2017)

  • Medicaid expects to recover nearly $1.9 billion lost to fraud, abuse and neglect in FY 2016.
  • Medicaid cases resulted in 18,730 investigations that led to 1,721 indictments or charges, 1,564 convictions and 998 settlements or judgments.