Why do employees commit workers’ comp fraud? The answer…they believe they will get away with it.
While we could go deep into the personality types that may be more likely to attempt to commit fraud, it’s fair to say that with almost any criminal activity, a risk versus reward calculation occurs in each perpetrator’s head. What is the likelihood of getting caught compared to the benefit they will gain?
Those cookies sure look good, but I’m not supposed to take one until I’m allowed to. Is anyone looking? What are the consequences if I do get caught?
Why do employees commit fraud?
Some fraudulent activities have to do with rationalization. Fraudsters commonly rationalize that they are owed the money after years of paying for workers’ compensation insurance. The amount they would take is so minimal that no one would even notice. This can also come in response to a perceived wrong. For example, if an employee felt mistreated.
Pressure is also a common element. The financial pressure of losing a job, mounting bills, and investments gone wrong, these all add pressure that may motivate someone to commit fraud. A lifestyle that does not match income or financial difficulties can also motivate fraud. It’s not uncommon to see some of the biggest fraudsters pushed to commit more fraud simply to support the lifestyle to which they have become accustomed.
Lastly is the idea of opportunity. Government programs are common targets of fraud since there is the belief that no one is monitoring closely enough to catch a couple of scams here and there. Unfortunately, based on the scale of these programs, there is likely some truth to this.
Therefore, the logical next step is that a worker under financial pressure, and given the opportunity, will commit fraud if they believe they won’t get caught and are already of the mindset that it won’t hurt anyone. Most people would never consider committing insurance fraud. Most claims are wholly legitimate. Most people are inherently honest or have a well-informed understanding that they are not very good at lying. There is a general understanding that it’s not worth the risk and an assumption that they will be the one to get caught.
Insurance fraud is a different crime than shoplifting. It is not a grab-and-run crime but a long-term commitment to hiding the truth. This is not a good equation for your small-time fraudster and therefore acts as a primary deterrent. Industry estimates place fraud in the range of 10-20% of insurance claims, but the reality is that outright fabricated claims are only a very small slice of claims. A good proportion of that calculation can also attribute to attempts to inflate claims. Still, insurance carriers are increasingly adept at detecting fraud and adjusting for these attempts.
This leaves us with that small portion of people willing and able to take the risk. They are the challenge, but you typically see them coming since deceptive behaviors do not only occur in insurance claims. These same people, believing themselves to be “good” at lying, will lie under many other circumstances. As their employer, their supervisor, and their co-worker, it is likely that you will have concerns about their truthfulness well before they file a suspicious insurance claim. ICW Group’s Special Investigations Unit serves as an additional fraud-prevention resource for ICW Group’s Claims Department and conducts investigations into suspicious claims.
What should I do if I suspect fraud?
If you have concerns about a suspicious claim, you are asked to immediately notify your Claims Examiner. If you would like additional assistance, you may also reach out to ICW Group’s Special Investigations Unit directly:
Fraud Hotline: 855-ICW-FRAUD (429-3728)
Email: fraudunit@icwgroup.com
Just as your efforts to keep your employees safe are the best way to avoid work injuries, clear messaging to your employees regarding the impact and consequences of insurance fraud is an essential part of your fraud defense strategy.
For additional resources and information, you are encouraged to visit ICW Group’s Policyholder Center and review our anti-fraud information and materials
and watch our anti-fraud webinars.
