Stamp Out Fraud

By Author: Marcus Stalder
Total Articles: 491
Comment this article

One of the best pieces of self-delusion practiced by the Libertarians is the idea there can be such things as victimless crimes. As an example, drug-taking is where you wreck your own body, i.e. you are the victim of your own stupidity. No one else suffers. No matter whether this is ever true, the idea gets transferred to activities depriving large and anonymous corporations of their money. This is not a "crime" because a corporation is not a person that suffers a loss. This is not to say all the people who steal from large corporations are Libertarians, but irrespective of their political allegiance, they somehow feel less guilt. So how does this all play out in the real world?

When you run a business, you have the joy of paying all those bills and overheads. So you pay the power companies and employ staff. As an insurance company, you also get to pay out all the claims, hopefully leaving a profit that gets distributed to the stockholders as a dividend. To keep the business profitable, you employ a crew of actuaries whose job it is to estimate the amount of money you need to pay all the claims. Most of the time, they ...
... get it right. If the statistics prove wrong, the insurer has to raise the premium rates. That brings in enough to pay the claims. Why might the actuaries make a mistake. Well, so long as you keep thinking only about traffic accidents, the statistics will not factor in the fraud factor.

If we drive down to Florida for a moment, this is currently the fraud capital of America. The entire operation has been completely professionalized to stage accidents and maximize the claims. It starts with the recruitment of the drivers and passengers. They plan exactly where the accident is to take place and the time of day. At the appointed hour, with independent witnesses, the two or more vehicles crash into each other. Names and address of honest witnesses are collected. "Ambulances" take the victims to clinics where the extent of their injuries are documented. Attorneys file the claims for drivers and passengers using the medical evidence and details of all the pay they are losing, accepting further sums as agreed damages for pain and suffering. Sometimes the clinics are mere fronts. Sometimes the attorneys are in on the scam as well. The result is more than $1 billion is fake claims every year. The current estimate is that every insured driver pays about $100 extra a year to cover these claims.

Car insurance quotes come in expensive as it is. When you are adding up to $100 a year because of fraud, something should be done. We are all the victims here. The insurance industry should recruit an army of claims adjusters who investigate every claim. Laws should be enforced by state and federal authorities to make those who commit fraud realize they are going to jail for long sentences if they are caught. Yes, it may slow down the claims process a little. But which is better? That car insurance rates fall, or that we continue to pay our hard-earned dollars to thieves and fraudsters?