Workers Comp Fraud
October 23, 2006
The “Hidden Cost” Hurts Business
Workers compensation fraud costs America's businesses billions of dollars each year.
The Insurance Information Institute estimates that property/casualty insurance fraud cost insurers about $29 billion in 2003. The total cost of all kinds of insurance fraud (including life and health insurance) is estimated to be between $85 billion and $120 billion a year.
Other than the obvious cost of your workers’ compensation premium, there are some additional costs of fraud you may not have considered.
- You will likely pay overtime costs for other employees to perform the missing employee’s work. Usually production declines and business delays occur, which may affect customer service and satisfaction.
- The effect on employee morale can also be very costly. If a co-worker is suspected of submitting a fraudulent worker's compensation claim, other employees may resent the added stress and workload.
- It may even lead others to file fraudulent workers’ compensation claims in the future if the benefits appear to outweigh the risks.
Federated Insurance recognizes our ethical and legal obligations to pay legitimate claims in a fair manner. Equally important is our obligation to protect our policyholders and the public from the increased costs associated with insurance fraud.
We can do this by working closely with your company to more effectively prevent, detect, and eliminate false insurance claims, while actively pursuing suspected perpetrators of insurance fraud. Please contact Federated immediately if you suspect insurance fraud.
This article provided courtesy of Federated Mutual Insurance Company, your association’s recommended insurer.
This information is brought to you by the PHCC Educational Foundation.
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