May 14, 2025
Fraud remains one of the most persistent challenges facing the insurance industry, costing the U.S. economy an estimated $309 billion annually. From false injury claims to inflated billing, fraud is constantly evolving and so is the way different generations perceive and respond to it.
The true cost of fraud
Although fraud is often considered a “victimless crime,” it often ends up costing millions for corporations and consumers. Life insurance fraud accounts for $74.7 billion annually, followed by Medicare fraud at $60 billion and property and casualty fraud (including motor theft) at $45 billion. Workers’ compensation and healthcare fraud also contribute significantly, at $34 billion and $36.3 billion respectively.
Defining the red flags
Distinguishing between fraud and abuse is critical. Fraud is defined as a deliberate deception intended to result in unauthorized benefit and must contain all four elements. Abuse, while often less intentional, still involves improper use of benefits, such as exaggerating injuries or billing for services not rendered. Both result in unnecessary costs.
The M.I.L.K. framework can help assess whether a deceptive act crosses the line into fraud.
- Materiality
- Intent
- Lie
- Knowledge
A generational look at fraud
While fraud is a universal concern, how it’s perceived varies across generations. However, when polled, the majority in each group said that they would have a negative reaction if someone they knew had committed fraud.
- Baby Boomers (1955-1964) value teamwork and career progression, but often maintain a more formal, authority-respecting outlook.
- Generation X (1965-1980) embraces autonomy and flexibility, with a career-focused yet skeptical approach.
- Millennials (1981-1996) seek meaningful work and feedback, balancing social consciousness with goal orientation.
- Generation Z (1997-2012) is digitally native, highly connected and expects transparency and fairness.
Despite their differences, these groups share common ground in areas like tech-savviness, a desire for work-life balance and digital literacy. These traits that can be harnessed when building education campaigns or fraud awareness training.
Additionally, the use of analysis and AI tools will allow for better identification of actionable steps earlier on in the life of a claim as well as provide guidance to the examiner based on past successes. Finally, it will offer deeper insight into the claimant’s options and help spur all parties to reach a timely resolution.
Next steps for organisations
As workforces become more multigenerational and digital behaviors continue to shift, insurers must adapt their fraud prevention efforts accordingly. Employers will have to work to meet their workforce in the middle to advance and educate our future generations while moving beyond what has proven ineffective.
