Date: July 24, 2003 Contact: Karen Burger, CPCU, CPIW
Phone: (610) 644-2100, ext. 7805
E-mail: burgerk@cpcuiia.org

New Yorkers Show Greater Tolerance for Insurance Fraud

Than Americans Countrywide, IRC Survey Finds

MALVERN, Pa.— According to a new study released by the Insurance Research Council (IRC), respondents residing in New York State were more likely than respondents nationwide to agree that it is acceptable to increase an insurance claim by a small amount to make up for insurance premiums paid when no claims were made (25 percent among respondents in New York versus 20 percent among respondents countrywide). They were also slightly more likely to say it is acceptable to increase a claim for the deductible that would have otherwise been paid (32 percent versus 29 percent).

The study, which was supplemented by a random sample of 501 adults in New York State, examined public attitudes toward insurance fraud to assess whether attitudes differed among New Yorkers compared to respondents across the country. This special state-specific analysis was prompted by recent indicators suggesting that auto insurance fraud is on the rise in New York State, particularly in the New York City metropolitan area.

Respondents in New York State were more likely than respondents countrywide to tolerate fraud in areas other than insurance, such as exaggerating one’s experience, education, or income on a job application. They were also more likely to find specific examples of application fraud and claim fraud as acceptable. For example, one-quarter of New Yorkers (25 percent) said it was acceptable to deliberately underestimate the number of miles driven on an insurance application, compared to fewer than one in five respondents countrywide (18 percent).

In addition, respondents from New York State were more than twice as likely as respondents across the country to say it was acceptable to stay out of work longer than medically necessary to get a higher insurance settlement (11 percent in New York versus 5 percent nationally). New Yorkers were also more likely than national respondents to agree that it is acceptable to change the details of an accident on a claim to ensure payment (14 percent versus 9 percent).

Although New Yorkers appeared to have a higher tolerance for some forms of insurance fraud, their level of concern for the issue of insurance fraud across the state was comparable to that of most respondents. Three-quarters of respondents in New York State expressed concern about insurance fraud in their state, compared to 78 percent of national respondents. There was only a slight difference between New Yorkers and respondents countrywide in terms of their likelihood to report someone for committing insurance fraud (3 percent in New York State versus 4 percent countrywide).

“Insurance fraud continues to be a concern in New York,” said Elizabeth A. Sprinkel, senior vice president, who heads the IRC. “Increasing fraud means higher costs not only for insurers and businesses, but also for consumers. The more permissive attitudes of New Yorkers toward insurance fraud suggest that state-wide education is needed on the economic and societal costs of these crimes and the benefits to consumers of anti-fraud efforts.”

The results contained in IRC’s recently released report, Insurance Fraud: A Public View, were based on data gathered in two separate studies. The first study, which explored public acceptance of insurance fraud and unethical behavior in other areas, as well as underlying attitudes about fraud countrywide and specifically in New York State, was conducted by RoperASW in October 2002. The study consisted of telephone interviews conducted among a national sample of 1,008 American male and female respondents eighteen years of age or older, as well as a supplemental sample of 501 adult respondents residing in New York State.

The second study, conducted by RoperASW in June 2002, consisted of in-person interviews conducted among a national sample of 1,995 American male and female respondents eighteen years of age or older. It explored specific actions by individuals, insurers, and the government to deter fraud.

For more detailed information on the study’s methodology and findings, contact the IRC by phone at (610) 644-2212, ext. 7569; by fax at (610) 640-5388; or by e-mail at irc@cpcuiia.org. Or visit IRC’s Web site at www.ircweb.org. Copies of the study are available for $35 each in the U.S. ($50 elsewhere) postpaid from the IRC, 718 Providence Road, Malvern, Pa. 19355-0725.

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NOTE TO EDITORS: The Insurance Research Council is a division of the American Institute for CPCU and the Insurance Institute of America. The Institutes are independent, nonprofit organizations dedicated to providing educational programs, professional certification, and research for the property-casualty insurance business. The IRC provides timely and reliable research to all parties involved in public policy issues affecting insurance companies and their customers. The IRC does not lobby or advocate legislative positions. Leading property-casualty organizations support the IRC.