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Consumer Insight

Dec. 14, 2022

Insurance Fraud Hurts Everyone

Insurance fraud is not a victimless crime. It costs businesses billions of dollars each year—an expense that is passed on to consumers in the form of higher premiums. Learn how to spot the warning signs of fraud to protect yourself.   


Types of fraud committed by malicious actors: Fake insurance companies or agents defraud consumers by taking money for premiums on bogus policies with no intention of paying claims. Common scenarios include:  

  • Scammers offering fake policies at costs that are significantly lower than competitors’ prices.   

  • Legitimate companies selling non-insurance products marketed to look like insurance. For example, an agent working for a company selling health discount plans might call the plan "insurance" when it is really an unregulated, non-insurance product.   

  • A dishonest insurance agent collecting premiums from a customer without reporting them to the company. The consumer believes premiums are paid, while the insurance company has no record of payment and cancels or does not renew the policy.   

Fraud perpetrated by consumers: Consumers can also be guilty of insurance fraud. The most common forms of policyholder fraud relate to auto insurance and workers’ compensation. Deliberately staging an accident, exaggerating a legitimate claim, or knowingly providing false information on an application are all examples of insurance fraud, which is a crime.   

Where to find help: Beyond your state insurance department, most states have special fraud bureaus that investigate insurance fraud. These bureaus investigate cases from various sources, such as law enforcement agencies, insurance companies, and consumers. You could also call the state attorney general’s office.   


Don’t ignore the warning signs. Red flags can include an insurance company or agent that does not have a phone number or is hard to reach. Another warning is if you purchase a policy and do not receive an insurance ID card or a copy of your policy in a timely manner.   

If you have doubts: Stop before signing any paperwork or paying your premium. Call your state insurance department and confirm the company or agent offering insurance is legitimate and licensed to sell insurance in your state. Legitimate agents and insurers will understand why you’re taking precautions.  

If you are a victim of insurance fraud or aware of fraudulent activity, take action: Contact your state insurance department to register a complaint against the insurance company. File a report with the Online Fraud Reporting System (ORFS). 


  1. Don’t ignore red flags. If you are suspicious, stop, call your state insurance department, and confirm.  

  1. If you are a victim of fraud, take action and report it.  

  1. Consumers can also commit insurance fraud. Insurance fraud is a crime, which leads to higher rates for all consumers.   


About the National Association of Insurance Commissioners

As part of our state-based system of insurance regulation in the United States, the National Association of Insurance Commissioners (NAIC) provides expertise, data, and analysis for insurance commissioners to effectively regulate the industry and protect consumers. The U.S. standard-setting organization is governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer reviews, and coordinate regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally.