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The Minnesota Department of Commerce 2009 fraud report was interesting. It starts with the statement that :

Every year, insurance fraud costs each Minnesota family up to $900.

I would really like to know where that comes from.

– According to the census in 2003 there were 2.0 million households in Minnesota. 66% of those are families. So that would mean 1,320,000 families.

– So at $900 a year that would mean $1,188,000,000 in fraud.

– It looks like the total premiums in Minnesota for 2004 Accident and Health was 99,092,981.

– That would put the deficit for Insurance companies at 1,088,907,019/year.

That would be a bad business to be in. These numbers just don’t add up, which would make you wonder why the department would overstate things so much? Maybe the numbers they get from the Insurance Federation are faulty. Maybe they can justify their own work with fear mongering.

The reality is that any fraud is bad. But, the use of bad statistics should never be used to combat it.

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Of Interest