"Many forms of insurance fraud increase during a down economy," said James Quiggle, spokesman for the watchdog group Coalition Against Insurance Fraud. "People's finances are crumbling, they're trying to shore up their income, and many normally honest people won't hesitate to try to bilk their insurance company."
Elsewhere, that impulse has a growing number of scammers staging fake car crashes to bilk auto insurance companies on phony medical bills, or torching their possessions for insurance payouts, or just to avoid having to make payments.
In Las Vegas, it has meant skyrocketing bogus "slip-and-fall" claims -- in which people pretend they had accidents in stores, casinos or other commercial properties -- from 2008 to 2010.
Such cases are up 57 percent nationally but quadrupled in Las Vegas, where the Great Recession has left the region with the country's highest foreclosure rate and the state with its all-time highest unemployment rate, according to an analysis by the nonprofit watchdog National Insurance Crime Bureau. New York, Los Angeles and Philadelphia all saw a greater raw number of bogus claims, but Vegas had the most per capita as well as a larger jump.
"It really has become a front-burner issue for our group over the past few years," said Michael Geeser, president of the Nevada Insurance Council, an industry coalition. "Much of it is speculation as to why Vegas is so high on the list, but one of the things is that we have a lot of businesses and we have millions of tourists here, and that creates these instances where fraudulent claims can grow."
An exacerbating factor is that many businesses just pay out small claims to avoid litigation, NICB Vice President Roger Morris explained. "If somebody's going to pay you off, give you a few thousands dollars just to get rid of you, sometimes they're going to do it."
He also wonders if people are more likely to want to file claims in Vegas because they want someone to blame for the fact that a fall or injury has ruined a vacation.
"Most people save up all year to take a vacation to Las Vegas. They take time off from work. And what is more frustrating than you get here and day one you hurt yourself and you miss your vacation," he said. "They're more prone to go to the hotel and say, 'I've lost my vacation and money. What can you do for me?' That's a genuine mindset."
Intriguingly, different geographic regions report facing different forms of increased insurance fraud problems. Florida, for instance, is the national capital in what is known as staged accident fraud, in which poor people, often immigrants, are recruited by scam rings to pretend they were in accidents. Bogus victims go to medical practices that are in on the scam and take advantage of the fact that Florida has a requirement that auto insurance companies pay out a minimum of $10,000 per passenger in medical bills regardless of fault, said Florida Insurance Council vice president Gary Landry.
The NICB found more than 2,100 suspected incidents since January 2009 alone, and four of the top 10 counties for this problem are in the Sunshine State.
"Say I stage an accident with you and I'm really not hurt, but I and two or three other people go into a pre-arranged clinic that I'm a buddy with," Landry said. "The police records don't say who the passengers in a car accident are, so there's no record and we all claim neck injuries, which are very hard to disprove."
Morris said that 2008 and 2009 were big years for suspicious car fires, cases in which people drive their vehicles to a remote place and light it aflame in hopes that they can claim it stolen and totaled. Nevada, with its endless empty deserts, was a hotbed for this sort of activity as well. Geeser's group formed a task force with police and fire investigators last year and did a public education campaign that taught, among other things, that this is not as easy to get away with as one might think.
"In some cases we get these guys walking back to their homes, their arms singed from having set their cars on fire," Morris said.
Slip-fall claims against businesses don't affect homeowner insurance rates, but businesses do pass along rate increases to customers, Morris said. And the cost of auto arson, staged accident fraud and other car-related scams account for more than $200 of each driver's insurance premiums every year, Geeser said.
"Ultimately, honest people everywhere pay for insurance swindles because many fraud costs are passed on to honest policy holders in higher premiums," Landry said. "Americans are just trying to make it through some of the roughest times in recent memory, trying to pay the grocery bills, the mortgage, their kids' tuition. Now crooks are piling on by defrauding their insurance companies and raising the rates for everyone."