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Insurance Fraud: A Big Problem That Requires Our Attention
Jeff Ryan - CLU, ChFC, AIA, CIC, CPCU
May 6, 2025
Insurance fraud is a significant problem, exceeding $300 billion annually, with the Property and Casualty sector contributing nearly $50 billion to that total.
The result is that everyone pays more through higher insurance rates, which many statistics suggest could account for up to $400 to $700 per year for the average insurance customer. In an environment where inflation has already taken a significant bite out of everyone's insurance budget, it is incumbent upon all of us to address the problem.
Fraud happens in various forms, from staged auto accidents to exaggerated homeowners' claims and fraudulent workers' compensation filings.
Auto insurance bears a significant burden, with over $20 billion lost to premium leakage each year due to application misrepresentations. Underreporting mileage and omitting drivers will result in over $10 billion in costs annualy. Fraudulent bodily injury claims further inflate premiums.
Homeowners' insurance fraud often increases after natural disasters, with exaggerated losses. In some high-risk states like Florida, fraudulent contractor schemes and post-disaster claims drive up premiums. The result is a national average homeowners' insurance cost of $2,300 per year (for $300,000 in coverage). Fortunately, our area's average rates are
much lower.
Business insurance faces similar challenges. Workers' compensation results in false injuries or misclassification of workers to reduce premiums.
At the risk of sounding overly pessimistic, the trend is worsening. Sixty percent of insurers report an increase in fraud over the past three years, driven by economic pressures and increasingly sophisticated schemes (Forbes, 2025).
What Consumers Can Do to Fight Insurance Fraud
Consumers play a crucial role in combating insurance fraud, beginning with vigilance and heightened awareness. Recognizing signs of fraud is essential—be cautious of unsolicited offers, pressure to sign assignment of benefits forms, and requests for personal information.
Another critical step is to protect your data. Many fraudulent claims are committed by stealing your identity. Avoid sharing your sensitive information with illegitimate sources. Use a reputable password manager and, whenever available, multi-factor authentication on websites.
Keeping your policy information up to date and accurate, and stored in a secure place, helps protect you from fraudulent claim activities. Consumers should also report suspected fraud to the Insurance Fraud Bureau (IFB) or
NAIC's online system, as underreporting hinders enforcement. Purchasing identity theft or cyber insurance can provide additional protection against fraud-related losses.
The Role of Independent Agents
As an Independent Agency, the Ryan Agencies are on the front line of defending against insurance fraud. We work with you, our clients, to ensure we properly verify information, cross-check details and work to rectify inconsistencies.
The Role of Insurance Companies
With the increasing use of Artificial intelligence, insurance carriers are now utilizing data mining to detect fraud trends. Deloitte predicts that AI as a fraud detection tool can save P&C insurers over $100 billion by 2032 in the battle against fraud.
A Call to Action
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As can be seen, fraud costs us a significant amount each year. To help mitigate the impact on premiums, it is essential that insurance consumers remain vigilant, protect their data, and report any suspected fraud. At the same time, independent agents and insurance companies can utilize education, technology, and advocacy to protect their clients. Together, we can reduce the $300 billion per year fraud burden and create a more affordable insurance landscape.
Some Sources:
- Forbes, "Insurance Fraud Statistics 2025," https://www.forbes.com/advisor/insurance/fraud-statistics/
- Deloitte, "Using AI to Fight Insurance Fraud," https://www2.deloitte.com/us/en/insights/industry/financial-services/financial-services-industry-predictions/2025/ai-to-fight-insurance-fraud.html
- Insurance Fraud Bureau: https://www.insurancefraudbureau.org/
This article may have been originally published at Quora.com.
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Living in New York, you might have a stack of insurance documents—auto, homeowners, health, or life insurance policies—filed away somewhere. But how long should you keep those documents, and specifically, what papers should you hold on to?
The year 1962 was marked by historic events—from the Cuban Missile Crisis to the passing of Marilyn Monroe. But while the world focused on these headlines, Lee A. Ryan was working alongside his brothers on my grandparents' farm when an unexpected opportunity arose—an invitation to join the insurance business. With no prior experience, no clients, and limited resources, my dad took a leap of faith and partnered with Nationwide Insurance to start an agency from scratch. Operating out of his home on Karr Valley Road in Almond, NY, he built his business one relationship at a time (some of whom are still clients!), laying the foundation for what would become a lasting legacy.
“Am I covered if I drive someone else’s car?” Or, “Am I covered if someone else drives mine?”
Many don’t realize that the insurance industry is one of the country's most regulated business segments, especially in New York State. The New York State Department of Financial Services (NYS DFS) wields significant control over the insurance business and has a stated goal of protecting consumers.
Most property insurance companies offer Actual Cash Value or Replacement Cost settlement options. Typically, insurance companies will require that you insure the property to the settlement value you choose. If you select Actual Cash Value, the amount you may be required to insure the property for will be less than the corresponding Replacement Value.
In that spirit, the Ryan Agency is sponsoring a Stearns BBQ Dinner pickup at our office on 57 Broadway Mall in Hornell on September 12th from 3:00 PM to 4:30 PM.
Today, an individual’s credit history can play a more significant role than any one of those traditional factors. Good Credit Scores lead to a Positive Insurance score. A good Insurance Score greatly influences what someone will pay to insure their vehicles.
Insurance companies offer various discounts for which their policyholders may qualify.
Great Eight number Six (6) suggests taking a look at removing Comprehensive and Collision on Older Vehicles.
By reducing the number of claims in your insurance history, you can significantly affect your rates in the future.
