Consumer insurance fraud in the US property‐casualty industry

Abstract

Purpose The purpose of this paper is to review the management of consumer insurance fraud in the US property‐casualty market, attending to definition, prevalence, insurer and regulatory responses, and outcomes. A social marketing campaign is offered as a partial, long‐term solution. Design/methodology/approach This paper explicates the difficulties associated with defining and measuring consumer insurance fraud, then models the system of factors now in place in redress. Findings Little agreement was found for a common definition of consumer insurance fraud and this was explained in part due to the decentralization of insurance regulation, competitive factors, and inconsistency in claims processing. The paper concludes by offering a social marketing campaign as a tool for reducing the incidence and severity of single‐claims fraud, the latter believed to be the largest source of consumer insurance fraud. Originality/value This paper affords a macro‐level view of a common and expensive social problem, suggests a practical solution with the promise of reducing long‐term losses at all levels.