We Are The Victims Of Fraud

By Author: Norris Rios
Total Articles: 572
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If you talk to some Libertarians, they get very excited about the idea of victimless crime. The one they most often mention is drug-taking. If one person take a baseball bat and hits another, this is clearly criminal behavior. The victim has the lumps to prove it. But if one person takes drugs, he or she is doing this voluntarily. There's no victim. Everything that follows from this behavior is ignored. The Libertarian believes in the now. If you choose to hit yourself with a bat or a street drug, that's your body and your right to abuse it as much as you want.

Criminals also get blinded by reality when they steal from large corporations. They seem to think there are no victims. So let's follow their reasoning when it comes to insurance companies. They stage a crash between two vehicles and fake medical reports of injuries. The claims are then worth several hundred thousand dollars. But, our criminals argue, this is just a company, not real people. This is not like a home invasion where you break in and take any loose cash. The problem with such justifications is that they fail to explain where the insurance company gets ...
... the money to pay out on the fraudulent claims. The sad reality is that we pay. Everyone who buys an insurance policy is paying into a central fund used to pay out all the claims. If there's not enough money to pay all the claims, cover the administrative costs of the business, and leave a profit, the insurer raises the premium rates. The more fraud there is, the higher the premium rates.

So just how high are the rates because of fraud. The most research effort has gone into the situation in Florida. This is now considered the fraud capital of America with more than a billion in suspect claims paid out every year. There are a number of reasons for Florida's leading position, the most important being its status as a no-fault insurance state. Unlike the majority of US states, Florida has preferred to encourage insurance companies to pay out on claims quickly and not worry about deciding who is at fault. In the majority of other states, the courts decide who is a fault and that decides which insurance company will pick up the bill. In the no-fault states, your own insurance company pays for your losses no matter who is at fault. This reduces the incentive for insurers to dispute claims and fight over whether the claims are real and justified.

It's estimated that the auto insurance quotes for every policyholder in Florida show about $100 per year in additional premium to cover all the fraud. The insurers could employ an army of claims adjusters to investigate every suspicious claim. Over time, these people would pay for themselves, saving more than their salaries. But, in the short term, the cost of this would cut into the insurers' profits. Not surprisingly, they have suggested the state employs more law enforcement officers to investigate the criminal gangs responsible. Tax payers are not too keen on this. The result is the steady rise in auto insurance quotes for all. We are the victims here.