But dannye, studies say that most people think of insurance fraud as a victimless crime. Some of our readers will observe that when you say "everyone's rates have to go up" that cost is spread across all of those insured. So what if my rates go up a few pennies? Meanwhile, I've got a brand new DVD player in the car to replace the one that was "stolen" (nudge nudge, wink wink). And why did my rates go up last year? To pay for all of those "stolen" ski boots, car stereos, and whatnot. (This type of fraud is usually called "soft fraud" as it is an exaggeration of a real claim.)

What about medical insurance fraud? This is surprisingly prevalent. Millions of dollars are lost annually to various kinds of scam. Both to patients and to overbilling doctors, or through unnecessary x-rays and other procedures done purely for billing purposes.

The Coalition Against Insurance Fraud estimates the annual cost of various types of insurance fraud to be more than $79 billion per year. They compute that this amount is a hidden tax of more than $900 per family each year on the costs of goods and services.

Here's a scary statistic1: A 1995 study for the Insurance Research Council found that 24 percent of Americans felt it was acceptable to pad a claim to make up for premiums paid in previous years. Nearly 40 percent of residents in large cities found the practice acceptable.

  1. From the Coalition Against Insurance Fraud page at http://www.insurancefraud.org/