With efforts to stop Medicare fraud, mortgage fraud and securities fraud drawing national headlines, the Federal Bureau of Investigation has reaffirmed its goal to target all forms of white collar fraud, including insurance fraud. In a recent press release, the FBI specifically mentioned several forms of white collar fraud that are common to the insurance industry. The FBI works with state and local agencies and regulatory bodies to investigate and prosecute people suspected of insurance fraud.

Generally speaking, the FBI targets what it considers the most important criminal matters. Functionally, this means that wealthy or prominent individuals who are suspected of criminal activity draw the attention of the FBI. In terms of insurance fraud, the FBI directs its resources to issues, including:

  • Disaster fraud
  • Asset diversion, meaning using premiums for personal use
  • Auto accident fraud
  • Property insurance fraud

Fraud involving life insurance policies of terminally ill or elderly people

Insurance company executives, insurance brokers and other insiders are common targets for FBI investigators. While an individual who stages an accident or misreports an injury has committed fraud, the FBI prefers to devote its resources to criminal organizations, executives, and other insiders who repeat a type of fraud to gain large sums of money.

Insurance fraud costs the industry an estimated $30 billion a year. As with many forms of white collar crime, the evidence of insurance fraud can be complicated for those unfamiliar with the industry. A person accused of insurance fraud generally faces an experienced adversary with nearly unlimited resources. The FBI does not investigate unless they are convinced that fraud is occurring.

Source: Federal Bureau of Investigation, “Investigating Insurance Fraud,” 31 January 2012

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