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Insurance Fraud Estimation: More Evidence from the Quebec Automobile Insurance Industry

L. Caron and Georges Dionne

Ecole des Hautes Etudes Commerciales de Montreal- from Ecole des Hautes Etudes Commerciales de Montreal-Chaire de gestion des risques.

Abstract: This article follows a previous study on insurance fraud in the Quebec automobile insurance industry (Dionne and Belhadji, 1996). Results from that research showed that 3 to 6,4% of all claim payments (excluding those for "glass damage only") contained fraud, representing 28 to 61 million dollars in 1994-1995. This evaluation was a minimum since it was limited to observed fraud only. In this paper, we apply a statistical method to estimate the total fraud level in the industry for the same period. Our results show a multiplicative factor of 3,4% of fraudulent files found in Dionne and Belhadji, which means that total fraud payments ranged from 96,2 to 208,4 million dollars in 1994-1995. Our Best Guest Estimator roughly a 10% fraud rate or about 113,5 million dollars.

Keywords: FINANCIAL MARKET; INFORMATION; INSURANCE (search for similar items in EconPapers)
JEL-codes: G14 G22 D82 (search for similar items in EconPapers)
Date: 1996
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Working Paper: Insurance fraud estimation: more evidence from the Quebec automobile insurance industry (1997)
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Persistent link: https://EconPapers.repec.org/RePEc:fth:etcori:96-02

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